SNP unveil £70m fund to aid first time home buyers

Nicola Sturgeon visits Erica Deacons whose parents are firsttime buyers in Alloa. Picture: Jshpix.co

The First Minister said the cash, to be spent during 2015-16 through the Open Market Shared Equity Scheme (OMSE), would have a “huge impact on people’s life chances”, with interest-free loans that are expected to lead to 1,700 new sales.

Ms Sturgeon suggested the government-funded loans could now have a potentially transformational affect on home ownership in Scotland and “help today’s generation of young people” move out of the rented sector and become property owners.

Ms Sturgeon announced the £70m on top of £86m invested in the scheme during earlier phases of funding, which helped 2,300 people buy a home, with total sales worth around £250m.

The Scottish Government said the figures showed it had helped people go from being renters to owner-occupiers.

Ms Sturgeon unveiled the new funding alongside social justice secretary Alex Neil during a Cabinet visit to Alloa.

She said: “This scheme will have a huge impact on people’s life chances and will help them make a move from living in the social rented sector, the private rented sector or residing in the family home.”

Under the initiative, people with mortgage and savings that cover between 60 per cent and 90 per cent of the value of a new-build home are offered loans to make up any shortfall in return for a government stake in the property.

Although there is no stated average award, a Scottish Government case study suggested that OMSE can make loans of about £22,000 for a two-bedroom property worth £80,000 where a buyer needs help to make up the shortfall.

The scheme is “aimed at low to moderate income households”, with a Scottish Government website suggesting that someone with an income of £18,000 would potentially be eligible for help after their application is means tested.

The latest tranche of funding comes from £515m set aside by finance secretary John Swinney for affordable housing, but which has only now been allocated to OMSE.

Mr Neil said the scheme had led to an increase in property ownership by targeting people living in rented homes and housing associations, as well as offering priority to armed forces veterans and disabled people.

“The scheme has also helped free up houses in the social rented sector.”

However, the SNP government was accused of being “behind the curve” on the issue after David Cameron said 200,000 homes will be made available to first-time buyers in England by 2020 if he is re-elected as Prime Minister on 7 May.

Mr Cameron has pledged to double the number of cut-price starter homes to be built under a Conservative scheme, as he set out his ambition to make home ownership “the privilege of the many, not the preserve of a few”.

The scheme south of the Border targets under-40s priced out of the first-home market by offering developers the chance to build on cheaper brownfield commercial land and waiving taxes – in return for a 20 per cent cut in the sale price.

Scottish Conservative housing spokesman Alex Johnstone claimed the SNP’s plan to expand home ownership did not match the scheme announced by Mr Cameron to discount new property prices by up to 20 per cent.

He said: “This issue of supporting house buyers is becoming a real election issue and will be one that the SNP is falling well behind on. The SNP government is failing to make the same progress being made down south on this and is well behind the curve. The figure of £70m means that the scheme will fall dramatically short of expectations.”

Labour leader Ed Miliband said Mr Cameron’s plan on housing had “failed Britain and failed families, as he set out his own plans to build hundreds of thousands of new homes.

Mr Miliband said: “There is no bigger priority for the next Labour government than building homes again in our country.

“Under this government we are building fewer homes than at any time since the 1920s and record high numbers of families are being forced to rent.”

“Labour has a better plan to build hundreds of thousands of new homes, ensure that local first-time buyers are given priority and get a fairer deal for millions of families that rent.”

Scottish Liberal Democrat housing spokesman Jim Hume said the SNP government had failed to build enough social housing properties and had presided over a growth in the number of people living in temporary accommodation.

He said: “When the money for these sort of projects was announced by the UK government the SNP attacked it as ‘funny money’ and ‘a con trick’. So it is good to see them change their mind and help people to buy.

“The SNP in the Scottish Government has taken its eye off the ball. What we now need if we are to tackle Scotland’s housing crisis, where thousands of households are stuck in temporary accommodation whilst on waiting lists for social housing, is for the SNP to commit to build more homes for social rent.”