The Scottish government has announced it will be extending its First Home Fund scheme to support first-time buyers in getting on the housing market.
Originally launched as a pilot scheme in December 2019, First Home Fund was introduced to help buyers purchase their first home from either the new build or second-hand property markets. The scheme was scheduled to end in March 2021, however the government has stated the scheme will reopen for applicants in the new financial year and run through until March 2022*.
Extending the First Home Fund
To support first-time buyers, the First Home Fund provides an equity loan of up to £25,000, with buyers required to contribute a minimum of a five per cent deposit and taking out a minimum 25 per cent mortgage on the purchase price of the property.
The Fund initially was given a budget of £150m, however the Scottish government invested a further £50 million in July to help combat the reduction of higher loan-to-value mortgages caused by the Covid-19 crisis. The scheme has been extremely popular with buyers since the property market reopened in June, and it is expected that the fund will support more than 8,000 households moving to a new home by the end of the financial year.
Although buyers looking to move in this financial year only have until October 2 to apply for the fund, Scottish housing minister Kevin Stewart has announced the government intends to reopen the fund for applications in the new financial year for home purchases completing in 2021/22.
Commenting on the extension, Kevin Stewart said: “The pilot of our First Home Fund has been a huge success, helping thousands of people own their first home. While the scheme is almost fully subscribed for 2020-21, I am pleased to say that I will reopen the pilot for the next financial year, and look forward to announcing further details of this in due course.”
The news on the First Home Fund follows the Scottish government decision to reduce Land and Buildings Transaction Tax (LBTT) rateson houses up to the purchase value of £250,000, acting as a positive catalyst for Scotland’s property market.