Early closure of LIFT scheme shows how desperately buyers need support

Paul Hilton, ESPC's CEO, discusses how the premature closure of the recently reopened OMSE scheme demonstrates how much demand there is for financial support for struggling first-time buyers:

“It was a shock but not a surprise to see that just one month after reopening, the Scottish Government announced that its flagship scheme of the Low-cost Initiative for First Time Buyers (LIFT), the Open Market Shared Equity (OMSE) scheme has already been paused for new applications for 2024/25 [as of 19 July 2024].

There is obviously significant demand from those seeking homeownership, who are ready and willing to buy a home of their own but simply can’t make it happen without this kind of help – the clear level of demand for the OMSE scheme shows that if they could, they would. At ESPC, we have long been banging the drum for first-time buyers; we know that increasing numbers of aspiring homebuyers need financial support to help them step onto the property ladder, and the overwhelming demand for the latest iteration of the OMSE scheme clearly demonstrates that this remains the case.

After the First Home Fund used up a year’s worth of allocated funding and closed after just eight days in April 2021, it was clear to see how much buyers have been searching for financial assistance, and the reopening of the OMSE scheme was clearly welcome news to thousands of hopeful buyers across Scotland, but unfortunately, it’s been taken away again in a matter of weeks. Has the Scottish Government once again drastically underestimated the scale of the demand that exists among our aspiring homeowners? We understand that there can only be so much money to go around, of course, but perhaps to align with those budgetary constraints, the time has come for a more creative and commercial approach to satisfy this demand.

At a time where we have an official housing emergency, a cost-of-living crisis and the highest interest rates for 16 years, it’s no surprise that buyers are looking for more help to own a property. As we all know, the rental market is a challenging place to be for tenants, with a shortage of quality properties available, and the various challenges brought about by the rent freeze and other legislations, so there is likely to be increasing numbers of people feeling that owning a home is a better option than renting one, but still need a boost to get a foot onto the first rung of the ladder. There are also those living with their parents and keen to find a home of their own, and of course, we can’t discount the many thousands of ‘hidden homeless’ people across Scotland, for whom a scheme like this could be a lifeline. In today’s economic climate, owning a home may be just out of reach for many; not everyone has the privilege of or the access to ‘the bank of mum and dad’, and a reputable, proven scheme like LIFT could make the world of difference.

I firmly believe that getting more first-time buyers onto the housing ladder confers wider economic benefits, and we need to do more to ensure that new buyers are getting the same opportunities that we had to own their own homes. The housing market is cyclical by nature; we need buyers to keep coming into the market and moving their way up the ladder, so that existing homeowners can do the same. First-time buyers are chain-free by default and are always needed within the market, to ensure property chains don’t drag on. There’s been a growth of chains and first-time buyers can stop the spiral and keep the market moving at a healthy pace for all involved.

We have been saying for some time that we’d like to see the Scottish Government think about what more could be done to support first-time buyers and get them onto the property ladder, and this latest news reconfirms that this is desperately needed. Whether that’s a reopening of the First Home Fund, with more carefully considered levels of funding made available, or whether there’s an argument for longer-term, wider-ranging solutions such as increasing the LBTT threshold for first-time buyers, building more affordable homes and looking at a widespread shared equity scheme – we believe that there are many options that could be looked at, to make sure that those who dream of owning a home can do so.”