SNP’s flagship housing fund runs out of cash in days

The Scottish Government’s flagship First Home Fund has run out of money in just eight days, in what opposition parties have branded a “spectacular misjudgement”.

The £60m fund, which lends people up to £25,000 towards their deposit, was launched on April 1 but was closed on Thursday afternoon after being inundated with applications. The initiative is now “fully committed” for 2021/22.

The news has been described as “devastating” for thousands of Scots hoping to get onto the property ladder, with the lack of availability of 95 per cent LTV mortgages making it “incredibly difficult” for first time buyers to access mortgage finance - despite “strong evidence” showing that owning a home is cheaper than renting.

Funding for the scheme was slashed by 66.5 per cent from £200m last year, with SNP ministers blaming the UK Treasury for the cuts.

“We anticipated that there would be huge demand given the success of the pilot scheme run last year,” said Nicola Barclay, chief executive of industry body Homes for Scotland.

“Despite this, the Scottish Government allocated just 30 per cent of the levels spent in 2020, citing budget cuts from Westminster for the reduction.”

Ms Barclay has called on Kate Forbes, Scotland’s Finance Secretary, to “act now” to support all those who will be “devastated” by the announcement.

“No one can be in any doubt about the need to support those unable to save for large deposits, and we will be watching closely at pledges made by all political parties as the election campaign continues,” she added.

Responding to the news, Scottish Conservative economy spokesman Maurice Golden said: "This will come as a blow to those who dream of owning their own home only to have the ladder pulled out from under them.”

Mr Golden said that house builders had warned there would be “huge demand” for the scheme, leaving the SNP with “no excuses for this spectacular misjudgement”, adding: “They either didn't listen or just ignored the warnings.”

The Scottish Lib Dems said: "Once again, SNP ministers make a big announcement of policy but don't back it up. Hundreds of people are left disappointed, especially young people who worry if they will be the first generation never to own a home."

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.”