The Scottish Government’s new First Homes Fund, aimed at assisting first-time buyers with a £10,000 deposit contribution, has faced criticism for failing to tackle the underlying causes of Scotland’s ongoing housing crisis. While the scheme offers financial support capped at properties valued up to £300,000, detractors argue it overlooks the broader issues affecting housing availability and affordability.

Details of the First Homes Fund

The First Homes Fund is designed to help prospective buyers take their initial step onto the property ladder by providing a government-backed equity share in the property. Homeowners retain full ownership and title, with no monthly payments or interest charged. The government’s equity share is expected to be repaid upon the sale of the property.

Shirley-Anne Somerville, Cabinet Secretary for Social Justice and Housing, emphasised the scheme’s role in addressing the difficulties faced by many, particularly younger people, in saving for a deposit. She stated: “For too many people across Scotland, particularly younger people and first-time buyers, home ownership has felt increasingly out of reach.” Somerville highlighted that the fund forms part of a wider programme backed by a record £4.9 billion investment in affordable housing over the next four years.

Criticism over the scheme’s effectiveness

Despite its intentions, the scheme has been criticised for not addressing the root causes of Scotland’s housing emergency. Scottish Conservative MSP Meghan Gallacher described the fund as a distraction from “nearly two decades of failure” by the SNP. She argued that the government’s policies, including rent controls, excessive regulation, and anti-growth measures, have restricted housing supply and made it harder for young people to access the property market.

Gallacher also criticised the Land and Buildings Transaction Tax (LBTT), describing it as “punishing” and a further barrier for first-time buyers and families. She proposed that the Scottish Conservatives would abolish LBTT on primary residences and focus on reducing bureaucracy to stimulate housebuilding, aiming to deliver 80,000 affordable homes over the next parliamentary term.

Concerns from homelessness advocates

Gordon Llewellyn-MacRae, assistant director of Shelter Scotland, expressed disappointment that the government’s first major housing intervention prioritises first-time buyers rather than addressing homelessness. He highlighted the plight of thousands of children living in temporary accommodation and criticised the scheme for failing to tackle the root causes of homelessness.

Llewellyn-MacRae urged the government to adopt a radical approach within its first 100 days, focusing on delivering new social homes, protecting people’s housing rights, and addressing systemic issues such as racism and bias in the housing system. He warned that schemes like the First Homes Fund tend to inflate house prices and disproportionately benefit higher earners, offering little support to those most in need.

He called for prioritised investment in at least 15,693 social homes annually and enhanced support for overstretched homelessness services, arguing it is inappropriate to prioritise assistance for first-time buyers over those without safe housing.

What this means for landlords

For landlords and letting agents, the ongoing housing emergency and the government’s housing policies have significant implications. The criticism of the First Homes Fund underscores the persistent shortage of affordable and social housing, which can increase demand for rental properties. However, restrictive policies such as rent controls and increased regulation may also impact rental market dynamics and profitability.

Landlords should remain aware of the evolving policy landscape and the potential for further government interventions aimed at addressing housing supply and homelessness. Engagement with these developments is essential to anticipate changes that could affect rental demand, property values, and regulatory compliance.

Source: Based on reporting from Property118

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