Thousands of young families are facing disappointment after a Scottish Government scheme to help first-time buyers ran out of cash in just eight days.
The flagship First Home Fund, which lends people up to £25,000 towards their deposit, was launched on April 1 but is already “fully committed” for 2021/22.
It is understood the initiative was closed on Thursday afternoon after being inundated with applications.
The budget for the fund was slashed from £200m last year to £60m this year, with Scottish ministers blaming a 66.5% cut in Financial Transactions from the Treasury.
Link, the housing association which runs the scheme for the Scottish Government, said: “Any applications in progress but not yet submitted at point of closure are unable to be processed.”
The news will represent a huge blow to young families across Scotland who are struggling to find suitable accommodation and get on the property ladder.
The escalating housing crisis was repeatedly highlighted in focus group and opinion poll research carried out for Survation to inform our election coverage.
This has been a hugely popular scheme and has helped thousands of first-time buyers plug the gap in their deposit – there will be many hundreds, if not thousands, of buyers left disappointed by this news.”
Greig Brown, mortgage operations director at Aberdein Considine, one of Scotland’s largest property and mortgage firms, said concerns had been raised about the cut to the fund.
“This has been a hugely popular scheme and has helped thousands of first-time buyers plug the gap in their deposit – there will be many hundreds, if not thousands, of buyers left disappointed by this news,” he said.
“Many lenders are still looking for 90% mortgages (10% deposits) from first-time buyers, or even greater in some cases.
“The UK Government’s Mortgage Guarantee Scheme, which was supposed to increase supply of 95% mortgages, has yet to have any meaningful impact.
“Many in the industry voiced concerns when the finance secretary announced that the First Home Fund had been scaled back and I hope that consideration is given to extending it.”
A Scottish Government spokesman said: “The First Home Fund has now closed to new applications as the allocated 2021-22 budget for the fund has been fully committed.
“As previously said, the total Scottish Government Financial Transactions budget in 2021-22 was cut by almost two thirds as a result of the UK Government’s Spending Review in November.
“As such, difficult choices have had to be made including reduced funding for the First Home Fund in 2021-22 and the closure of the main Help to Buy scheme.”