LIFT – what is it and what do brokers need to know?
With a variety of schemes under one umbrella term, it’s no surprise that Low-cost Initiative for First Time Buyers (LIFT) can get confusing. Launched by the Scottish Government to assist those looking to get a foot on the property ladder, the LIFT scheme includes two main types of shared equity schemes, as well as a Shared Ownership scheme which is currently being phased out. Here’s what you need to know about the schemes currently available under LIFT.
New Supply Shared Equity Scheme
Similar to Help to Buy Scotland the scheme only applies to new-build homes, the New Supply Shared Equity Scheme (NSSE) is different in that buyers purchase a 60-80% stake in a property from a housing association or housing co-operative, rather than a housing developer. The scheme is aimed at those on low and moderate incomes, and interested parties are means tested to demonstrate that they can’t buy a suitable house for their needs without help. The scheme is mainly for first time buyers, but can also be utilised by buyers who have had a significant change in circumstances, or those who have a disability and can no longer get by in their current property.
Open Market Shared Equity Scheme
Unlike the NSSE, the Open Market Shared Equity Scheme (OMSE) is open to first time buyers only, with priority given to certain groups such as those in social housing, disabled people and members of the armed forces. Buyers can purchase a 60-90% stake in a home on the open market, but are not limited to new build properties. Like NSSE, applicants will be means tested to ensure they cannot purchase a suitable property without help.
To ensure homes sold through the scheme are starter homes for first time buyers, there are limits on the price of homes that can be purchased under OMSE, which vary depending on area and size of the property.
What else should brokers be aware of under LIFT?
Under both the NSSE and OMSE schemes, the Scottish Government can retain a stake in the property, known as a “Golden Share”. This is usually the case in areas where there is a small amount of affordable housing and little opportunity to build. For NSSE, the Government can retain a stake of 20%, and under OMSE this can be 10%.
Buyers who purchase under these schemes with a Golden Share therefore cannot increase their equity stake over the Government portion. For example, if a buyer purchased a 65% stake in a NSSE home with a Golden Share, they could only increase their share to a maximum of 80%.
A number of lenders, including Leeds Building Society, will consider LIFT scheme applications where there is a golden share, subject to conditions.
If you have further questions about LIFT and the schemes available, discuss with a member of the team now by calling 03450 50 5555.
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This article is correct at time of going to press, May 2016.