The relaunch of the Scottish Government’s First Homes Fund will be welcome news for many first-time buyers in Scotland. Saving for a deposit remains one of the biggest challenges when buying a first home, particularly with the high cost of living and rising rents.
The First Homes Fund is a scheme designed to help address this challenge by supporting first-time buyers with the purchase of their first home. The aim of the scheme is to provide a practical route onto the property ladder for those who can obtain a mortgage but need support with their initial deposit.
Who is the scheme for?
The scheme is aimed at first-time buyers in Scotland. This is someone who does not own (and has not previously owned) a property anywhere in the world. The scheme is intended for buyers purchasing a home to live in as their main residence, rather than as an investment or buy-to-let property. Buyers are still required to contribute the remainder of the deposit and obtain a mortgage to benefit from the scheme, rather than relying solely on cash.
How does the scheme work?
The scheme will provide a maximum contribution of £10,000 towards the deposit for first-time buyers purchasing a property up to the value of £300,000. If you are looking at properties over £300,000, you cannot benefit from the scheme. This may limit options for some buyers in areas such as Edinburgh and Glasgow.
The scheme operates on a shared equity basis. This means the Scottish Government contributes part of the purchase price in return for a share of ownership in the property. The first-time buyer would still hold the legal title, but the Government’s contribution is repaid later, usually when the property is sold.
A key benefit of the scheme is that there are no monthly repayments to the Government, and no interest is charged on the Government’s share. When the property is sold, the Government receives a share of the profits from the sale proportionate to its original contribution.
When can I apply?
The Scottish Government has confirmed that applications will open by the end of June, and the scheme is expected to be highly popular. The first phase will support 2,000 applicants, with plans to expand to 50,000 over the course of this Parliament. Given the limited initial availability, early preparation will be key for those hoping to secure a place.
For many first-time buyers, the relaunch of the First Homes Fund represents a valuable opportunity to take an important first step onto the property ladder with additional support.
If you think the scheme may be of interest to you, we recommend getting in touch with a mortgage advisor and Solicitor as soon as possible to ensure you are in the best position to apply when the scheme opens.
If you would like to discuss the First Homes Fund, or any aspect of purchasing a property, please get in touch with a member of our Residential Property team.
