If you want to buy a newly built home in Scotland but can’t afford to pay the entire cost yourself, the New Supply Shared Equity (NSSE) scheme can help you. Under this scheme, the Scottish Government provides assistance so that you pay for the largest share of the property and it holds the share that’s left. Read on to find out how this scheme works and whether you’re eligible to use it.
What is the New Supply Shared Equity (NSSE) scheme?
As part of the Low-cost Initiative for First-Time Buyers (LIFT), the NSSE scheme enables those with a low or moderate income to buy a newly built home. The properties are available from local councils and housing associations across Scotland. The Scottish Government provides assistance in the form of an equity share although you benefit from owning your home outright.
Who does the NSSE scheme help?
As well as helping first-time buyers, you can use this scheme if you’ve owned a home before but have undergone a considerable change in your circumstances. This could be the breakdown of your marriage, for example. The NSSE scheme is also available for priority access groups. This includes you if you are:
- Aged 60 or over
- Disabled
- A social renter
- A member of the armed forces
- A veteran, having left the armed forces within the last 2 years
- A widow, widower or other partner of service personnel for up to 2 years after your partner lost their life while serving
How does the NSSE scheme work?
Under this scheme, you pay the majority of the purchase price – usually between 60% and 80% – and the Scottish Government covers the rest. It does this by forming a shared equity agreement with you. For example, if you pay 75% of the purchase price, the Scottish Government holds the remaining 25% as an equity share. You are named on the title deeds so can enjoy full ownership of your home. As such, regardless of the Scottish Government holding an equity share, you are responsible for covering the mortgage payments, arranging buildings and contents insurance, dealing with repairs and maintenance, paying factoring fees if applicable, paying the council tax and utility bills as well as handling the fittings and furniture.
The property you wish to buy must be the only home you own. It can be slightly larger than you need if you prefer, by one apartment size. As with any property purchase, you need to pay for the additional costs involved, such as the survey and legal fees.
How to apply for the NSSE scheme
To qualify for the NSSE scheme in Scotland, your application has to be assessed by the local council or registered social landlord. They will need to know details about your income, how much you can pay as a personal contribution, the maximum mortgage loan you can afford, your current accommodation and your household. They need to be satisfied that you cannot afford to buy a home without assistance from the NSSE scheme.
Increase your equity share
You can increase your share of equity whenever you wish. This increase must be for a minimum of 5% in a year. You can usually increase your equity share until you own 100% of the property unless a ‘golden share’ applies.
What is a golden share?
There is a lack of affordable homes in some areas. If your property is located in one of these areas, the Scottish Government will retain a 20% share of it. A ‘golden share’ clause will be included in your shared equity agreement if this applies to your property. Going back to the earlier example of you having a 75% share, this means you’d only be able to increase your share by 5%. The Scottish Government would retain 20% and your maximum share would be 80%.
What happens if you want to sell your home?
You don’t have to repay the Scottish Government’s equity share until you sell your home, unless you own 100% of it by then. The money you receive from the sale depends on the price you’ve accepted, how much your equity share is and how much of your mortgage loan is still outstanding.
For example, you may wish to sell your home in Trinity, Edinburgh, and you have a 75% share of the equity at that point. When it’s sold, you will receive 75% of the price it sells for and the Scottish Government will get 25%. The share values apply regardless of whether your property’s value has increased or decreased since you bought it. This means if the value of your property has gone up, you benefit from 75% of that higher value. Likewise, if the value decreases, this will be reflected in the amounts both you and the Scottish Government receive. The outstanding balance of your mortgage will be repaid to your lender from the 75% you’re due from the sale proceeds.
Get expert mortgage advice for your NSSE scheme purchase
Our mortgage brokers in Edinburgh are available to discuss your circumstances in preparation for your home purchase in Scotland. They can ascertain the maximum mortgage amount you can afford and guide you on the other home-buying costs you need to factor in. Simply call our head office on 01322 907 000 or send an email to us at info@trinityfinance.co.uk to get started. One of our expert brokers in Edinburgh will reply to you as quickly as possible. They will work swiftly to secure a competitive mortgage deal for your new home purchased through the NSSE scheme.
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