Scottish Government sets new Help to Buy price ceiling
Housing Minister Margaret Burgess has announced a new price ceiling for Help to Buy (Scotland) which it is hoped will support more people to get onto or move up the property ladder.
As of Wednesday, October 22 2014, the shared equity scheme will only apply to homes worth up to £250,000, rather than the current maximum of £400,000 in a move the Scottish Government said will ensure that more people can benefit from available funding and help to target funding at lower income families and first time buyers.
With 85 per cent of all Help to Buy (Scotland) sales to date already at or below this new threshold, and an estimated 94 per cent of sales having been to first time buyers, most new build houses will not be affected by the changes.
Since Help to Buy (Scotland) was launched in September 2013, more than 3,000 homes have been purchased with an additional 1,500 expected to be completed by the end of this financial year.
Mrs Burgess said: “The Help to Buy (Scotland) scheme has opened up the housing market to thousands of house buyers. By targeting the scheme at properties at or below a value of £250,000, the scheme will support first time buyers and people who otherwise wouldn’t be able to afford to buy a new build home.
“The changes will also see the benefits of Help to Buy extended for as long as possible and build on the widely welcomed arrangements for the Land and Buildings Transaction Tax announced by the Finance Secretary last week.
“We will continue to monitor this successful scheme and will look at ways of making sure everyone in Scotland has access to good quality, affordable homes.”
Demand for the scheme has been high with Ministers allocating £275 million to the scheme to date, which is £55m more than the industry’s original £220m request. £100m of that funding has been allocated to the 2015-16 budget.
Mrs Burgess added: “Housing continues to be a priority for this Government and we are investing over £390m next year to deliver 6,000 affordable homes, of which 4,000 will be for social rent. Our 2015-16 budget makes clear that by investing in housing we are boosting the economy, improving the energy efficiency of housing stock and reducing fuel poverty.
“By replacing the stamp duty with the Land and Buildings Transaction Tax, the tax paid will be more proportionate to the house price, which means that the tax is fairer and will be based more closely on the buyer’s ability to pay.
“This new approach will benefit the majority of Scots, with nobody paying tax on the first £135,000 of a house purchase and 90 per cent of homebuyers either paying less or the same amount as they would under current arrangements. It will be a major boost to first time buyers and improve the affordability of starter homes.”
Trade body Homes for Scotland said the criteria changes will provide builders and buyers with clarity following the market disruption caused by funding for this financial year running out in July.
Philip Hogg chief executive said: “Given the scheme generated nearly 5000 reservations and sales in just ten months before demand exhausted the budget allocation for this financial year, this interruption has resulted in significant business uncertainty as the industry awaited the Scottish Government’s next move.
“This adjustment to a £250,000 maximum house price for 2015/16 transactions does, however, provide some clarity to both builders and buyers. Still covering the vast majority of the market, it will also ensure that the limited funds are targeted to help more of those most in need, however, we still suspect that even with this change the £100m budget will be insufficient to last the full year.
“With demand for the scheme proven without doubt, we continue to press for an increased budget for next year in order to avoid a repeat of the stop-start experience of this year which seriously impacted business planning and caused anxiety and uncertainty for home buyers.
“We therefore hope that Help to Buy (Scotland), along with specific help for SMEs to enable them to build more homes under the scheme, will be obvious beneficiaries for the extra £125m housing investment announced in last week’s draft Budget.”