How does the shared equity scheme work for buying a home in Scotland?

Full answer

Scottish shared equity schemes are aimed at helping people who could not otherwise afford to buy a home outright, working differently from shared ownership schemes found in the rest of the UK. **How it differs from shared ownership** Under shared ownership (common in England), the buyer typically pays rent on the portion of the property they do not own outright, and can gradually buy further shares in a process called staircasing. Under most Scottish shared equity schemes, by contrast, the buyer generally pays no rent on the government's or housing association's retained share -- there is simply a shared ownership stake, with the buyer contributing what they can afford (via mortgage and deposit) and the funder holding the balance as an equity investment rather than as a landlord charging rent. **Who the scheme is aimed at** Scotland's main shared equity schemes are generally targeted at first-time buyers or those on lower to moderate incomes who cannot afford to buy a suitable home outright on the open market, often for new-build properties built specifically for the scheme, with eligibility and income criteria set by the Scottish Government and delivered through registered social landlords or housing associations. **How the buyer's share is worked out** The buyer typically needs to demonstrate what size of mortgage and deposit they can afford, and the funder's share makes up the difference between that affordable amount and the property's full market value, commonly resulting in the buyer owning somewhere between 60% and 90% of the property outright, though the exact split depends on the buyer's circumstances and the specific scheme. **What happens on sale** When the property is eventually sold, the sale proceeds are normally split between the buyer and the funder in the same percentage as their respective ownership shares at that time (unless the buyer has since staircased to full ownership, where available), meaning the funder shares in any increase (or decrease) in the property's value in proportion to their retained equity stake. **Costs the buyer is responsible for** Even though no rent is charged on the funder's share under most schemes, the buyer is still responsible for the full cost of repairs, maintenance, buildings insurance and other running costs of the property as if they owned it outright, since these obligations are not typically shared in proportion to the equity split. **Worked example** A first-time buyer wants to purchase a new-build home valued at £180,000 but can only afford a mortgage and deposit covering £126,000 (70% of the value). Under a shared equity scheme, the housing association retains a 30% equity stake (£54,000) with no rent charged on that share. When the buyer later sells the property for £220,000, the housing association is normally entitled to 30% of that new value (£66,000), with the buyer keeping the remaining 70% (£154,000), reflecting how the funder shares proportionately in the property's rise in value. **Practical tip** Check the specific scheme's rules carefully, since shared equity products in Scotland can vary in their approach to staircasing (buying further shares over time), and whether any percentage-based fee or minimum equity retention applies on sale -- your solicitor should confirm the exact terms before you commit to a purchase.

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