Help available for first-time buyers in Scotland

13 May 2024

What government schemes are currently available for first-time buyers in Scotland?

Under the umbrella of the Low-Cost Initiative for First-Time Buyers (LIFT), first-time buyers can explore options such as the New Supply Shared Equity scheme and Shared Ownership schemes.

Not only this, other help is available for first-time buyers such as ISAs and Land and Buildings Transactions Tax relief. 

New Supply Shared Equity Scheme (NSSE)

If you want to buy a new build home from a housing association or local council but can't afford the total cost, you might be able to get help through the New Supply Shared Equity (NSSE) scheme. The NSSE scheme is available across Scotland and is open to first-time buyers. Through the NSSE scheme you'll be able to buy a new build home without having to fund its entire cost, and will receive assistance from the Scottish Government.

You'll pay for the biggest share – usually between 60% and 80% of the home's cost – and the Scottish Government will hold the remaining share under a 'shared equity agreement', which it will enter into with you. For example, if you pay for 70% of the home, the Scottish Government will hold 30% of the share.

Although you'll have complete title to your home and your name will be on the title deeds for it, there will be a mortgage (or 'standard security') on the home to make sure the Scottish Government's share is protected. It also means that if you ever choose to sell the home, the Scottish Government will get a share of the money.

Since the NSSE scheme is aimed at households with low to medium incomes, the local council or social landlord in your area will assess your application to see if you qualify. You'll need to be able to show that you can't buy a new build house that suits your needs without getting help from the NSSE scheme.

For more information, visit the Scottish Government website.

Shared Ownership Scheme

If you want to buy a home that's for sale but can't afford the total cost, you might be able to get help through the shared ownership scheme.

You should be aware that shared ownership is very different from shared equity. In shared equity you own the home outright, but with shared ownership a housing association still owns part of the home and charges you a fee to live in it.

Through shared ownership you'll be able to buy a share of a home instead of having to fund its entire cost. You can buy a 25%, 50% or 75% share of a home. The remaining share is owned by a housing association. For example, if you buy a 25% share, the housing association will own a 75% share.

If you are interested in shared ownership, you can get details of available properties from the participating social landlord in your area. They might already have a waiting list of people who want shared ownership, and they'll take your housing needs into account to see where you'll sit on the list.

If you can afford to buy a house outright, you won't qualify for shared ownership housing.

For more information, visit the Scottish Government website.

Help to buy ISA and Lifetime ISA

Help to Buy ISAs are no longer open for new applications. However, if you already have one, they allow you to save up to £200 per month towards your first home, with the government contributing a 25% bonus (maximum £3,000) on top of your savings.

The Lifetime ISA remains available for opening and serves as a helpful tool for saving towards your initial home purchase. With this ISA, you can save up to £4,000 per tax year, and the government will add a 25% bonus to your savings, akin to the Help to Buy ISA. Additionally, you can earn interest on your savings, and since it's an ISA, the interest is tax-free. Find out more about Lifetime ISAs here.

LBTT reductions for first-time buyers in Scotland

LBTT, known as the Land and Buildings Transaction Tax, serves as Scotland's alternative to stamp duty, applicable to property purchases in Scotland. It operates on a tiered system, with the property's value determining the LBTT amount due.

For first-time buyers, LBTT relief is available for properties valued up to £175,000, exempting them from paying the tax on their initial home if it falls within or below this threshold.

If the first property exceeds £175,000 in value, relief applies to the transaction value up to £175,000, with LBTT payable on the portion surpassing this amount. To calculate how much LBTT you will need to pay, click here.