Scottish Government encourages low-income households to utilise home ownership scheme
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The Scottish Government has urged low and moderate earners who are keen to buy a home to consider applying to the LIFT (Low-cost Initiative for First Time Buyers) Open Market Shared Equity scheme.
The LIFT scheme provides funding to help eligible applicants across Scotland to purchase a home on the market in an area of their choosing. The buyer funds the majority share of the purchase – between 60-90% – usually through a combination of mortgage and deposit, with the Scottish Government contributing the remaining share.
The scheme is designed to help people who can face difficulty getting onto the housing ladder.
The priority groups for LIFT include first-time buyers, social renters, disabled people, over-60s, armed forces members, veterans who have left the forces in the past two years and bereaved partners of armed forced members who have died while in service during the last two years.
Many people in these priority groups may be keen to move into home ownership in 2023 but may feel unable or unwilling to do so due to the cost of living crises and increased interest rates. However, the LIFT scheme could offer a solution.
As the Scottish Government’s contribution is added to the buyer’s deposit contribution, the loan to value ratio when buying through the LIFT scheme is lower than when buying without assistance.
A lower loan to value ratio generally means the mortgage products available to a buyer will be lower than if the loan to value ratio were higher, which could mean lower than expected monthly repayments.
In August 2022, the rules around purchasing a property over the market valuation were relaxed in order to put applicants on a more level playing field with other buyers when purchasing an affordable home.
These factors make the LIFT scheme a crucial housing option for those looking to buy in 2023, something which the Scottish Government is keen to communicate to the public.
Housing Secretary Shona Robertson said: “We recognise the challenges people are facing in this cost of living crisis and we want to help as many people as possible to buy an affordable home this new year.
“This scheme puts applicants on a more level playing field with other buyers when purchasing an affordable home. Buyers can purchase a share of a property while holding the full title, with the Scottish Government funding the remaining share under a shared equity agreement.
She added: “Scotland continues to be a great place to buy a first home and has led the way in the delivery of affordable housing across the UK. We have now delivered almost 113,000 affordable homes since 2007, over 79,000 of which were for social rent.
“If you’re from one of the priority groups and would like to own a home, I’d encourage you to consider the Open Market Shared Equity scheme.”
Example LIFT purchase
Property location: Inverness
Property size: 3 bedroom (4 apartment)
Property valuation: £200,000
Purchase price: £200,000
Buyer deposit: £10,000
Mortgage amount: £130,000
Scottish Government contribution: £60,000
In this example, the Scottish Government contribution is 30% of the purchase price and will get the same percentage back when the property is sold. Alternatively, the LIFT buyer can buy out the Scottish Government’s stake at any time.
Link Housing administers the Scottish Government’s LIFT scheme across all 32 local authority areas in Scotland.
Homebuyers are urged to visit www.linkhousing.org.uk/LIFT or text “LIFT” to 66777 for more information.
The online application form is also available on Link Housing’s website: it is recommended that buyers seek independent financial advice before applying.
