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Low Cost Home Ownership

Rural Housing Guide

Rural house prices have more than doubled in the last few years, with external pressure on rural housing markets from holiday/second homes/commuters combined with low average rural incomes mean that the affordability of housing to buy is a huge issue in rural Scotland. This is reflected in the low numbers of first time buyers entering the rural housing market compared with towns and cities.

In this environment access to low cost home ownership is vital for rural households and the provision of low cost housing for sale or land for housing has been a concern of communities. In Eigg, West Harris and Gigha, community landownership has meant that land could be made available for local households to build their own homes. Rural Housing Burdens attached to the land sales has meant that houses built on this land have not been lost to the holiday home/ second home market.

In previous years this way of helping deliver affordable housing was helped by the availability of Rural Home Ownership Grants (RHOGs) to help people build their own homes. These grants were discontinued in 2011/12 and replaced with more money for the Open Market Shared Equity scheme. However the Rural Housing Service is working with others to persuade the Scottish Government that RHOGs have vital part to play in helping meet rural housing needs. We hope to be able to announce a change of policy in the near future.

As well as providing house sites for self build communities looking to provide affordable housing to rent may also want to consider building houses for low cost homeownership too where conditions can be imposed to prevent the houses being sold on. This would help meet a demand in the community for low cost home ownership and also help bring in further funding to cross subsidise the project and help make it “stack up”.

Currently the Scottish Government supports low cost home ownership through the LIFT shared equity scheme. This has three main components;

New Supply Shared Equity, under this scheme, the Scottish Government gives grants to registered social landlords - normally a housing association or housing co-operative - to help them build or buy new homes for sale.

New Supply Shared Equity with Developers under this scheme the Scottish Government and developers fund part of the purchase price of new housing built by private housebuilders.

Open Market Shared Equity under which priority groups can get help to buy a house for sale on the open market.

A community trust could provide shared equity housing using either the Scottish Government Innovation Fund or grant from 2nd homes council tax funds where the local authority makes these available.