The Scottish Government recently
unveiled a new shared equity scheme, Help to Buy (Scotland), aimed at helping
first time buyers purchase their first home. With funding of £220m over three
years the scheme will provide buyers with up to 20% of the value of the house,
in the form of an equity loan.
So far, so good, but while some
housebuilders have described the scheme as a potentially “game changing
initiative”, it will be incredibly difficult to reap any real benefit from this
scheme in the Western Isles, especially in the Southern Isles, as this scheme
will only apply for new-build homes.
There is a general lack of new
build housing, the likes of which are being targeted by this scheme, in the
Southern Isles. So far the only developments that have qualified have been
built by Hebridean Housing Partnership (HHP), the local housing association. HHP
have plans to build four new housing units consisting of 1 and 2 bedroom homes
in Balivanich but they have not publicised any plans to increase housing stock
in the Southern Isles, other than those units, in the near future.
So where does this leave us? Are
there any other local schemes targeting first time buyers in the islands? Well,
sort of…
Back in 2011, Comhairle nan
Eilean Siar considered the introduction of a Mortgage Assistance Scheme to help
first-time buyers. The scheme, which would have helped those struggling to
secure their initial deposit, was investigated and in December 2012 was dropped.
The Comhairle decided instead to look at introducing a Home Loan Scheme. After
exploring the idea in early 2013, the Comhairle determined that the mortgage
market had improved sufficiently and that there was reduced demand for such
schemes. In September 2013 the idea was officially shelved and the Comhairle
decided to look into another option – the Rent to Buy scheme. The Rent to Buy
model has been trialled in other rural areas in Scotland and funding to pursue
the scheme could be provided by the Scottish Government, but will it ever come to fruition, or will it be
scrapped in favour of exploring the next big thing in housing? Who knows?
I think there is a possible
solution for first time buyers here that the council has not yet considered and
it takes a completely different approach…
There are dozens of homes left
empty right across the islands. A couple of them have caught our eye when we
are driving along and we would love to buy one and fix it up.( I know that it
sounds like a cliché but my boyfriend is a joiner, and so is his dad, and my
dad is an electrician, and they have a lot of knowledge and experience between
them.) Not only are the properties usually in a traditional style (which we
love), but because of their condition they are cheaper so require a smaller
deposit (which is much more reachable than the deposits required for new
builds).
One major problem with fixing up
a run down house is the retention on the mortgage – a surveyor determines a
cost for completing the work that is required to bring the house up to a
satisfactory standard and that amount is withheld until the work is carried out
and another survey is completed. In the meantime the funds to complete the work
typically come from savings or loans (or possibly even generous family
members). This can be very difficult for first-time buyers who face enough of a
challenge getting the deposit together. As for a house that is uninhabitable in
its current condition, it is highly unlikely that you would find a financial
institution willing to give you a mortgage. Please correct if I am wrong (and
preferably give me the details of said financial institution).
Comhairle nan Eilean Siar have indicated
a commitment to bringing empty homes back into use in their housing
strategy but believe that the cost of renovating such properties is prohibitive.
A scheme aimed at buyers rather than owners, with no or low interest loans
covering the mortgage retention, could work because the buyers would have a
greater incentive to do the work (moving into the first home they have ever
owned), and the loan would be secure and short-term, with the full mortgage
value being released to the buyer upon completion of necessary works, thus
allowing relatively quick repayment of the loan.
Obviously, this is route would
not be appropriate for everyone but it would complement the schemes for new
builds nicely and would be much more appropriate for certain parts of the
islands. And if something like this could be devised and implemented very soon
that would be just lovely because we have our eye on a couple of places.