LIFT – A Shared Equity Scheme for First Time Buyers in Scotland
LIFT is a shared equity scheme introduced in Scotland and aimed at helping people on low incomes who wish to become house owners but cannot afford to pay the full price for a house. The scheme is run by the Scottish Government Housing and Investment Division (with the exception of Edinburgh and Glasgow where it will be run by the respective city councils). It is envisaged that a registered social landlord will fund part of the purchase price of the house using a LIFT grant.
Who will it help?
LIFT is aimed at households on low incomes. Their income will be assessed to ascertain if they qualify. Part of the investment criteria will involve applicants obtaining quotations from three different mortgage lenders on the maximum amount which they can borrow. LIFT will mainly aim to assist first time buyers into home ownership but can also help others, e.g. a disabled person who owns a house which is not suitable for their needs could be helped to move to a more suitable property. It is also envisaged that in some occasions where owner/occupiers are affected by demolition plans, LIFT would be available to help them buy a replacement house in the same area.
Where will you find these schemes?
LIFT will be available mainly in new housing developments as it is intended to encourage the building of more new houses to meet shortages in supply. It will target three types of projects.
1. Projects which grant fund registered social landlords to build new properties for sale on a shared equity basis.
2. Projects which grant fund registered social landlords to purchase properties at an appropriate discount from private developers for onwards sale to shared equity purchasers.
3. Projects which grant fund registered social landlords to develop new properties for sale on a shared equity basis to existing owner occupiers whose homes are scheduled for demolition and who wish to participate in an agreed redevelopment plan.
What level of equity state do I require to take?
Individuals purchasing a property from a registered social landlord will generally require to take an equity stake of between 60% and 80% of the market values of the property (as set by the district value). With the agreement of the grant provider, however, the maximum equity stake can be reduced to as low as 51%. This is likely to apply where a housing market is particularly pressurised or where people with particular housing needs have identified additional housing costs. In all cases the maximum initial equity stake which a homeowner can take will be 80% of the market value of a property.
Responsibilities as an owner
In contrast to other types of shared ownership schemes the owner will have full legal title to the property and will not make an occupancy payment to the registered social landlord. The owner will (a) be responsible for the valuation and legal costs in purchase (b) be responsible for the insurance of the property (c) be expected to occupy the property as their only residence (d) be responsible for all maintenance, repair and insurance costs.
An owner will have the option of increasing their equity stake after the initial purchase up to 100%. An owner however must wait a minimum period of two years after the initial purchase before they can increase their equity stake.
In October 2008 in response to worsening economic conditions the Scottish Government announced that it will extend the open market scheme throughout Scotland from January 2009. In March 2009 the Scottish Government confirmed that the open market scheme had been extended throughout Scotland from that date.
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