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Scottish government scraps Help to Buy
First-time buyers in Scotland will no longer be able to access loans via Help to Buy, as Scottish ministers have abruptly wound up the scheme, blaming UK government budget cuts.
The scheme was originally due to run until March 2022, but the Scottish government will now no longer be accepting applications after Friday 5 February.
The announcement follows the Scottish Budget last week, which also saw the government’s Affordable Housing Supply Programme spending cut by 16%.
Scottish ministers have blamed both of these decisions on a 66% cut to the government’s budget for financial transactions, which is set by the UK government.
In 2020/21, the Scottish government received £620m in financial transactions, which are used to make investments in private entities, from the UK government. For 2021/22, this number has been reduced to £128m.
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Scottish housing minister Kevin Stewart said the cut to financial transactions means ministers have had to “make difficult choices in how we best use these limited resources to support our shared equity schemes”.
“Any current approved applications which are delayed as a result of COVID-19 will be funded, provided the applicant’s financial position remains unchanged,” he added.
Launched in 2013, the Help to Buy (Scotland) scheme offers first-time buyers interest-free loans of up to 15% on new build homes.
The Scottish government’s separate First Home Fund, which offers first-time buyers up to £25,000 for new build and existing properties, will continue in 2021/22 with a budget of £60m.
A further £40m has been allocated to the Open Market Shared Equity scheme, which sees the Scottish government take an equity share in the homes of first-time buyers and other priority groups, including people aged over 60 and social renters.
It has been estimated by the Scottish government that this combined funding will assist more than 4,000 households to buy a home.
A HM Treasury spokesperson said: “At the Spending Review the chancellor confirmed an additional £2.4bn for the Scottish Government for 2021-22 through the Barnett formula - on top of its initial £35bn of funding.
“It is for the Scottish government to choose how to allocate its funding, but it can spend as much of that on capital as they like – including funding schemes such as Help to Buy. In addition, it can also borrow £450m of capital each year.”
