Help to Buy Scotland – which ran out of money earlier this year – has been allocated a new tranche of cash (£100 million) for next year and buyers can start to take advantage of it now.
But the rules have changed slightly. The ceiling on the price of new build properties that can qualify for the scheme has been cut from £400,000 to £250,000. That’s designed to make sure that the available money goes further and lasts longer.
Although the money is only going to be available from next April (the funding is allocated by tax year), prospective buyers can benefit from the scheme now because you can apply up to 9 months in advance of the anticipated completion date of your new home. In other words, if you expect your new home (and this version of the scheme only applies to new build homes) to be completed after April 5th next year, you can still apply for support from the scheme from next Wednesday 22nd October – a week today.
Get your skates on
And if you are planning to use Help to Buy Scotland, it’s probably best to get your skates on. Despite the reduction in the price of properties that can be bought under the scheme, demand is still likely to be high. In fact, 85% of Help to Buy Scotland transactions were below the level of the new price cap, so the reduction in demand for the scheme triggered by that change is not going to be great.
And other aspects of the scheme that do not seem to have been changed mean that it is still a very generous deal. For example, you don’t pay any interest on the 20% of the purchase price provided by the Scottish Government – ever. That means that you can buy a property and effectively pay only 75% of the mortgage (the other 5% is your deposit). And the 20% contribution is pretty generous in itself. A 15% contribution plus the buyer’s 5% deposit would have effectively created a 20% deposit – easily enough to qualify for a mortgage.
Introducing a mechanism by which interest on the government provided funds was eventually introduced (as happens south of the border) and reducing the proportion of the purchase price contributed by the government would have made the available funds go a lot further.
In the absence of those changes, get it while it is going. No wonder Homes for Scotland says: ‘we still suspect that even with this change the £100m budget will be insufficient to last the full year’.
But don’t forget that there is also a UK wide Help to Buy mortgage guarantee scheme for all properties (not just new build), so if the Scottish scheme runs out of money again, there is still a good chance of getting a 95% mortgage. You can find a brief description of both this and the mortgage guarantee version here.