Editor's note: This brief was summarised by The Property AI Newsroom from a report by The Negotiator. Read the original article for full details.

Scottish £10k Deposit Scheme Welcomed but Faces Criticism

A new Scottish Government scheme is offering first-time buyers an interest-free loan of £10,000 towards a home purchase. While the initiative has been welcomed by many in the property sector, concerns remain about its ability to address wider affordability and supply issues.

The First Homes Fund, launched on 24 June, provides eligible buyers with £10,000 towards properties priced up to £300,000. The scheme covers both new-build and second-hand homes, with the government taking an equity stake that is repaid when the property is sold.

The Scottish Government has stated that it expects 2,000 buyers to take up the scheme in its first 100 days. Over the course of the current Parliament, around 50,000 applications are anticipated. However, there are warnings that the annual funding pot could be exhausted quickly, potentially leaving many buyers without support.

Louise Drummond, National Intermediary Development Manager at Leeds Building Society, described the First Homes Fund as a constructive intervention that has been widely welcomed by housebuilders, advisers, and market participants. However, Drummond cautioned that the scheme is “not a silver bullet” and highlighted ongoing challenges in Scotland and the wider UK, including supply constraints, affordability pressures, and demographic changes.

Drummond also questioned whether the scheme’s support is sufficient in higher-priced areas, suggesting it may not significantly improve affordability for buyers facing larger deposit gaps. She noted that shared equity schemes can help bridge the deposit gap without over-stretching borrowers, but emphasised the importance of brokers ensuring clients understand the implications for future equity, remortgaging, and onward moves.

Letting agents and inventory clerks should be aware that the scheme’s funding windows may be short due to high demand, and that buyers who are ready to proceed will have a competitive advantage.