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The Low-Cost Initiative for First-Time Buyers (LIFT)

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In recent years, helping first-time buyers get onto the property ladder has become a priority in the UK. Schemes have been introduced to make it more affordable for people to purchase a house – and the Scottish Government has created one specifically for its country’s residents.

The Low-Cost Initiative for First-Time Buyers (LIFT) is an interesting scheme that offers financial assistance to people trying to get onto the housing ladder for the first time in Scotland. It comes with two different types of initiative, which we have outlined below.

Keep reading for an overview of LIFT and to learn how you may be able to benefit from it.

What is the Low-Cost Initiative for First-Time Buyers (LIFT)?

The Low-Cost Initiative for First-Time Buyers (LIFT) is a shared equity scheme that helps people in Scotland to buy a house and get onto the property ladder. There are two different types of initiatives involved in the scheme. These are:

  1. The Open Market Shared Equity (OMSE) scheme
  2. The New Supply Shared Equity (NSSE) scheme

Keep in mind that at the time of writing, the Scottish Government says that the LIFT initiative has been closed to new applications and may not open again until the 2024/25 budget is announced. 

What is OMSE?

The OMSE initiative is open to all first-time buyers, as well as priority groups such as people over 60 years old, disabled people, social renters, veterans and a few others. 

It involves purchasing a property without paying the full cost, as the Scottish Government will pay the remainder. This means you own the largest share in the house, and the remainder is jointly owned with the Scottish Government under a shared equity agreement. Therefore, if you ever decide to sell your property, the Government will get a share of the earnings.

If you own your house using the OMSE scheme, you can purchase a larger share of your property in the future. Keep in mind that this will require you to pay the entire valuation, as well as cover the legal fees. 

In some instances, the Government will limit the maximum amount of property you can own, so you should check the terms to find out if this is the case. 

This initiative has drawn comparison to Shared Ownership in England, although there is a difference. Shared ownership is when a housing association owns part of your home. In contrast, shared equity is when the Scottish Government loans you part of the cost of your home.

What is NSSE?

Like with OMSE, you are eligible for NSSE if you are a first-time buyer in Scotland or fall within one of the priority groups. 

This scheme helps people purchase a new-build home directly from a council or housing association without putting up the full cost. Instead, you will usually pay for between 60 to 80% of the total value, and the Government will pay the rest, thus triggering a ‘shared equity agreement’. 

If you own your property using the NSSE scheme, you are able to purchase a larger share of your house further down the line. To achieve this, you will need to cover the entire valuation, as well as all legal costs.

Sometimes, the Scottish Government will cap the percentage of shares you can own, so you should check the terms to find out if this is the case. 

Although the buyer will own the property outright, the Government’s interests will be covered by a standard security on their property. Furthermore, just like with OMSE, the NSSE scheme means that when you finally sell your property, the Government will get a share of the proceeds.

Is LIFT only available in Scotland?

Yes, the low-cost initiative for first-time buyers is a scheme the Scottish Government runs only. It is currently closed for new applications (at the time of writing) until the new budget is announced for 2024/25. 

In England, Wales and Northern Ireland, similar schemes such as Shared Ownership make it easier for first-time buyers to get onto the property ladder. You should speak to your local council or your estate agent and/or complete research online for guidance on the schemes available to you.

Who is eligible for LIFT?

The scheme is mainly targeted at first-time buyers who have never purchased a property before. Some of the other priority groups in Scotland are also applicable, including:

  • People aged 60+
  • Those who rent from the council or a housing association
  • People with a disability
  • Members of the armed forces
  • Veterans who have exited the armed forces within the past two years
  • Widows, widowers and other partners of service personnel for up to two years after their partner lost their life while serving

The scheme may also be made available to people who have previously owned a home and have experienced a significant change in circumstances – for example, a marital breakdown. You should speak to your council for guidance on whether your situation applies.

How can I apply for LIFT?

The application process varies between OMSE and NSSE.

For OMSE, you will need to become registered as applicable for the scheme before you purchase a property. This will involve contacting the administering agent to find out if you are eligible. From here, you will receive documentation confirming that your application is approved and the maximum value you can get a house for.

When applying for NSSE, you should contact the relevant social landlord or council. They can then advise you on how to submit an application. This usually involves providing information about your income, savings, and current living circumstances. If you are approved, the landlord/council will give you more details on the next steps you need to take. 

Can I sublet a LIFT property?

As a general rule, you cannot sublet your LIFT property, as the Scottish Government does not allow this. You could speak to your social landlord or housing provider to confirm, but it is unlikely to be permitted. 

What happens if you sell a LIFT property?

If the Scottish Government has provided you with financial assistance while buying your house (via the LIFT scheme), they will take a share of the proceeds when the time arrives to sell. This will usually be in proportion to the financial assistance that they provided you with.

Advantages and drawbacks of LIFT

LIFT makes it far more achievable for first-time buyers in Scotland to get onto the property ladder. With the difference between property prices and average income gradually increasing, this is an excellent method of helping people own equity in property.

On the other hand, in the rare instances that the government puts a cap on the shares you can own, this prevents you from ever owning the house outright. Some could argue that the opportunity to own part of the house still wouldn’t have presented itself without the financial assistance, though, making this a fair deal.

Both types of LIFT scheme make it possible to increase your own percentage. This means you are not ‘stuck’ at your original percentage, and if your financial situation improves, you can act accordingly.

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