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Agenda:

Reports that the Scottish Government's Help to Buy scheme has hit a cash shortfall for this financial year is a worrying development.

Help To Buy has been a tremendous aid to housebuyers and a great boost for the housebuilding industry and there will now be calls for a topping up of finances for it.

But the Government has limited finances and it might, instead, have to extend restrictions for entry to the scheme.

The big concern of an empty Help To Buy pot would be the impact it could have on people who are going through the application process, some of whom might fear they have missed the boat for this year.

This will produce a level of uncertainty and perhaps affect the confidence of house purchasers. If we've run out of money in July for this current year, what does that say about what will happen next year?

That this situation has happened isn't a shock for people in the industry who have been watching closely.

However, there is an opportunity to take a step back and think about the ongoing process and how it can be improved to support those purchasers who really need help from the scheme.

Help To Buy is a dual process that helps people in different circumstances. Some people who would never have found 20 per cent equity are assisted on to the housing market. Others who could raise a five per cent deposit, but otherwise couldn't secure a 95 per cent loan, have been able to get it.

If this were taken away, people would be excluded from the housing market who could not otherwise gain access to either of these options and this would once again have an impact on the housing sector.

The high response for Help To Buy has not been a surprise, as there is undoubtedly a pent-up demand for social housing and private housing.

What has been a surprise has been the speed at which uptake has occurred, to an extent because developers have been able to bring more product to the market more promptly than was initially anticipated.

Going back to the criteria for qualification for this kind of assistance, it's a pretty wide net. In London, Help To Buy can be accessed for homes worth up to £600,000.

In Scotland it's considerably lower, but it's still a big figure that exceeds the first-time buyer market level.

Help To Buy was always intended to operate right across the price range, and that has resulted in funds being used more quickly than would have been the case under a scheme targeted only at first time buyers.

I feel that the scheme is now going to have to be restricted at some level, or much more funding will have to be put in.

There are only three options for Help to Buy: restrict it by means- testing criteria; put more funding in; or accept that, when the scheme runs out, it runs out without satisfying demand.

What is clear is that the demand is out there, but the question to be asked is this: is the Government willing and, perhaps more importantly, able to meet it? If it isn't, it will have to target its support on a narrower section of the buyer market.

The housing market in Scotland was damaged, and Help To Buy undoubtedly helped to make it start moving again. Clearly, it could stall and perhaps go into reverse if Help To Buy isn't there at a sufficiently high level.

But the impact on the purchaser is equally important. We had gone through a four or five-year spell during which people didn't know what their house was worth, didn't know what the house they were looking to buy was worth and didn't know what they could borrow.

Now with Help to Buy apparently hitting problems, it could mean that, having worked towards a target of achieving a house purchase in some cases by gathering a deposit, people will find themselves in a situation where they have missed the boat and are left high and dry.

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Finance

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