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Recommendation

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									EVALUATION OF THE LOW-COST INITIATIVE FOR FIRST TIME BUYERS (LIFT)

SCOTTISH GOVERNMENT RESPONSE

Introduction

During 2010, ODS consulting carried out the evaluation of the following four of the Low-
cost Initiative for First Time Buyers (LIFT) schemes on behalf of the Scottish
Government:
 The Open Market Shared Equity Pilot
 The New Supply Shared Equity scheme
 The Shared Ownership scheme
 The GRO grants for owner occupation scheme

The Scottish Government welcomes ODS’ report, which has been helpful in considering
how successfully and cost effectively these schemes have been meeting the high level
outcomes they are intended to deliver, in particular:

   successfully and affordably meeting buyers’ housing needs, which would not
    otherwise have been met without the schemes;
   helping people achieve their home ownership aspirations over the medium to longer
    term and allowing them to move on when they need to; and
   delivering mixed, sustainable communities.

It is encouraging that ODS’ evaluation has found that in particular the shared equity
schemes have largely delivered these outcomes by meeting buyers’ housing needs -
and this has allowed many people to buy a home where they could not otherwise have
afforded it.

However, the evaluation does raise a number of concerns, in particular about the
effectiveness, affordability for buyers and value for taxpayers’ money delivered by the
shared ownership scheme and the effectiveness of targeting of the GRO grant scheme.
In line with the principles of public service reform, the SG will in future be focusing its
resources on those schemes which:
 offer best value for taxpayers’ money;
 are shown to be most affordable for buyers; and
 are effective in delivering key outcomes, such as helping first time buyers to buy and
    delivering mixed communities.

This means that we will continue to support our LIFT shared equity schemes in future
years, with the New Supply Shared Equity (NSSE) scheme being available to RSLs
as part of the new Innovation and Investment Fund (further details will be available on
this soon), along with a further, expanded phase of the NSSE scheme in partnership
with private developers. Open Market Shared Equity (OMSE) will also continue to be
available and will no longer be a pilot scheme. Due to financial constraints, it will for the
time being be focused on priority groups, in particular social renters in order to help free
up social housing, and members of the armed forces and veterans. However, the
Scottish Government will review the take up of the OMSE scheme in the summer to see
if it can be opened up to other key groups as well.



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Taking into account the evaluation’s findings, the Scottish Government does not plan to
continue providing funding to support the shared ownership scheme or GRO grant
schemes in pressured market areas. However, housing associations will still be able
to fund their own shared ownership schemes if they wish and GRO grant funding (which
will in future be known as ‘Partnership Support for Regeneration’) will remain an option
in certain circumstances to help introduce or increase owner occupation in regeneration
areas. The new Partnership Support for Regeneration will no longer form part of the
LIFT group of schemes as it is focus primarily on supporting regeneration and mixed
communities, rather than principally targeted at helping first time buyers.

In addition, where shared ownership or GRO grant schemes in pressured areas have
already been approved by the Scottish Government, City of Edinburgh or Glasgow City
Councils, those developments will still be allowed to proceed as planned. The Scottish
Government is happy to discuss the implications of the changes outlined above with
any local authorities or RSLs who may be planning projects which could be affected
(please contact your local Area Office in the first instance with any queries about
individual projects).

More broadly, the Scottish Government accepts and will be implementing the great
majority of ODS’ recommendations. Indeed, work is already being taken forward to
improve the schemes in a number of areas. Table 1 below sets out the Scottish
Government’s views in relation to each of the sixteen ODS recommendations. We will
be discussing with the RSL sector and local authorities appropriate ways to take
forward those recommendations which might require changes in approach on their part.


Scottish Government
January 2011




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Table 1 - Scottish Government (SG) views on ODS’ recommendations

            Recommendation                    Response        SG Comments/Planned Action
1.   Consider   placing    greater Accepted                 Focus will be on funding the more
     emphasis on geographical and                           targeted schemes (OMSEP &
     purchaser targeting in LIFT                            NSSE). OMSEP to be focussed on
     schemes.                                               priority groups only.

2.   Require RSLs to provide a               Accepted       Procedures to be updated to make
     comparable level of protection                         clear that RSLs are expected to
     to purchasers in LIFT schemes                          comply with the Consumer Code for
     as is available to purchasers                          Home Builders when participating in
     from         NHBC         registered                   LIFT new build schemes.
     developers.
3.   Encourage RSLs and private              Accepted       Procedures to be updated to make
     developers          to       provide                   this a requirement and make clear
     prospective purchasers of new                          that RSLs are expected to follow
     supply property with more                              SFHA’s Factoring Guidance.
     detailed information regarding
     their ongoing housing costs,
     particularly in        relation to
     anticipated service charges.
4.   Continue to promote the                 Partly         OMSE will continue to be available
     contribution       Open       Market    Accepted       across Scotland, although due to
     Shared Equity (OMSE) can                               financial constraints, will currently be
     make in meeting particular                             targeted only at priority groups.
     housing needs.
5.   Put in place arrangements to            Accepted       To be discussed to agree feasible
     pro-actively             encourage                     arrangements      with     RSLs.
     purchasers to consider their                           Procedures may be revised.
     options to acquire additional
     equity on a periodic basis.
6.   Consider        offering     greater    Accepted       Procedures to be revised to reflect
     flexibility to the timescales and                      this.
     levels of additional equity NSSE
     and OMSEP purchasers can
     acquire.
7.   Allow sharing owners to                 Accepted       Procedures to be revised to allow
     privately let their properties                         greater   flexibility in   certain
     under strict conditions in                             circumstances.
     situations      where      lack    of
     demand for shared ownership
     is preventing mobility.
8.   Consider introducing interest           Not Accepted The SG does not feel the current
     charges on its equity loan after        at this stage uncertain economic climate is a
     a period of time.                                     good time to introduce extra charges
                                                           for buyers.       However, this is
                                                           something which may be introduced
                                                           in future.



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9.  Review the use of the ‘golden       Partly         To be discussed with relevant local
    share’ in consultation with local   Accepted       authorities, although ‘golden share’
    authorities, and advise existing                   still to be available where local
    purchasers where it does not                       authorities feel there is a case for it.
    intend to exercise its right to
    repurchase a property.
10. Re-examine the golden share         Accepted,      Legal advice being sought on
    model to identify whether there     subject     to potential amendments to make
    would be value in replacing it      feasibility    ‘golden share’ less unattractive to
    with a right of pre-emption.                       buyers and lenders.

11. Ensure      that     prospective Accepted          Brochures for purchasers and
    purchasers are provided with                       lenders to be revised to make this
    more prominent information                         clearer. Clarifications for existing
    regarding the applicability of the                 owners to be discussed with RSLs
    ‘20 year rules’ and consider                       (could be linked to periodic reviews
    how to clarify the position for                    – see recommendation 5).
    existing purchasers.

12. Undertake further work to           Accepted       Internal assessment work to be
    assess the economic impact of                      carried out in 2011-12.
    OMSEP.
13. Encourage RSLs and private          Accepted       References to sources of good
    developers to draw on existing                     practice to be included in revised
    good practice examples and                         procedures.
    lessons learned elsewhere in
    the creation of mixed and
    sustainable communities.
14. Review the value of retaining       Accepted,      As noted on page 2, the SG will no
    three new supply LIFT schemes       except for     longer continue to fund shared
    to support households into          regeneration   ownership or GRO in pressured
    home ownership.                     GRO            areas (type 3 GRO), but will
    Consideration should be given                      continue    to   fund     GRO    in
    to discontinuing GRO and                           regeneration areas in certain
    shared ownership.                                  circumstances.
15. Introduce guidance on the           Accepted       Guidance note to be issued to RSLs
    setting of occupancy charges                       to set out how occupancy charges
    should it decide to retain shared                  are expected to be calculated.
    ownership.

16. Review and improve the way Accepted                Improvements to monitoring systems
    data is collected and collated in                  already being developed. Stricter
    relation to LIFT schemes.                          enforcement of requirement for
                                                       RSLs to ensure completion and
                                                       return of shared equity monitoring
                                                       forms is likely.




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