Answers · UK 2025/26

What is a Shared Equity Loan in Scotland and how does it work?

Scotland's Shared Equity schemes (such as Open Market Shared Equity and New Supply Shared Equity) let eligible buyers purchase a home with the Scottish Government taking an equity stake -- typically 10-40% -- in return for funding part of the purchase price. Buyers get a mortgage and deposit for their share only, reducing the amount they need to borrow.

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Shared Equity is a Scottish Government home ownership scheme, distinct from shared ownership (used in England and Wales), designed to help first-time buyers and priority groups purchase a home when they could not otherwise afford to buy outright. **How it works** Instead of buying 100% of a property, the buyer purchases a majority share (commonly 60-90%) using a mortgage and their own deposit, while the Scottish Government (through a housing association or local authority) takes an equity stake in the remaining share -- typically 10-40% of the property's value. No rent is charged on the government's share, which is the key difference from shared ownership schemes elsewhere in the UK. **Main schemes** - **Open Market Shared Equity (OMSE)**: for buyers purchasing an existing home on the open market, primarily aimed at priority access groups such as social tenants, people with disabilities, and members of the armed forces or veterans. - **New Supply Shared Equity (NSSE)**: for buyers purchasing a new-build home from a housing association or council, generally with a wider eligibility pool including first-time buyers. **Eligibility** Eligibility varies by scheme but generally includes: being a first-time buyer or falling into a priority group, having a household income below a set threshold (regularly reviewed), and being unable to afford 100% of a suitable home on the open market without assistance. **Worked example** Emma wants to buy a £180,000 new-build flat through NSSE. She qualifies for a 20% Scottish Government equity share (£36,000). She needs a mortgage and deposit only for the remaining £144,000 (80%), significantly reducing the income and deposit needed compared to buying outright. **Paying back the equity share** The government's equity share does not need to be repaid until the property is sold, or the owner chooses to buy out some or all of the share earlier ("staircasing"). When the property is eventually sold, the government receives its proportional share of the sale proceeds (based on the percentage, not the original cash amount) -- so if the property has risen in value, the government's payout rises too, and if it has fallen, the government absorbs a proportional loss. **Buying out the share (staircasing)** Owners can increase their share over time by buying out some or all of the government's stake at current market value, eventually reaching 100% ownership if they choose, subject to lender approval for any additional borrowing required. **LBTT implications** Buyers pay Land and Buildings Transaction Tax (LBTT) based on the total value of the property (not just their share) in most shared equity purchases, though first-time buyer relief in Scotland (0% up to £175,000) can still apply. Always confirm the specific LBTT treatment with a solicitor for your transaction.