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

Scottish Government Confirms Phased Release of First Home Fund

The Scottish Government has announced that the First Home Fund, a government-backed shared equity loan scheme for first-time buyers, will open for applications before the end of June. The scheme will provide £100 million of funding per financial year for the next five years.

First-time buyers in Scotland will be able to apply for a maximum loan of £10,000 to help purchase a new-build or second-hand property valued up to £300,000. The loan is interest-free, with repayment based on the value of the home at the time of sale. The scheme will initially be operated by Link Group/Link Housing, which previously managed a similar shared equity scheme from December 2019 to March 2021, until a new operator is appointed through a procurement process.

Unlike the previous scheme, which offered up to £25,000 in deposit support, the new First Home Fund limits support to £10,000 per applicant. Details about lender participation and the full application process have not yet been released. The scheme is expected to be popular, with significant demand anticipated from first-time buyers. There are concerns that the available funding may be exhausted quickly, potentially before all eligible applicants can benefit.

Industry figures have noted that the scheme is likely to help those who are close to reaching their deposit savings goal or have additional support, such as from family. The government and lenders are expected to play a key role in ensuring funds are allocated efficiently. However, lenders are reportedly waiting for further details from the government before confirming their involvement or application criteria.

The First Home Fund is seen as a positive step for first-time buyers in Scotland, despite the reduced loan amount compared to previous schemes. Letting agents and inventory clerks should be aware of the potential impact on the first-time buyer market and the possible increase in demand for property purchases as the scheme launches.