Home, Sweet Home

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).

Of course, there are schemes aimed at the owners of empty properties including one in Eilean Siar, but they will only help to create homes for private rent. I think that a scheme aimed at helping first time buyers to buy and renovate empty properties could solve a lot of problems. 

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.