Shared equity schemes: evaluation reports

1. Introduction

This report presents findings from an evaluation of the Scottish Government's three shared equity home ownership schemes: Help to Buy (Scotland) (HtB); New Supply Shared Equity (NSSE) and Open Market Shared Equity (OMSE). The study was commissioned by the Scottish Government to help inform the decision on the future of HtB and the approach to supporting homeownership as part of the Housing to 2040 work.

This chapter summarises the study context and objectives. The following chapters set out the research methodology and findings across the key themes for the evaluation:

• An overview of sales activity through the three schemes;
• The characteristics of buyers using shared equity schemes;
• Buyers' experience of the shared equity schemes, schemes' impact on housing outcomes for buyers, and future housing intentions;
• Impact of the schemes on the wider housing market in Scotland;
• Impact of the schemes on lending in Scotland; and
• Impact of the schemes for developers and new housing development.

Background

The Scottish Government ambition is to ensure housing costs are affordable for all households and that households in work have a reasonable chance to own a home, if that is their preferred tenure, that offers good access to labour markets. The Scottish Government's three shared equity schemes were all developed to make home ownership more affordable for households unable to buy without financial support. In the wake of the 2008 global financial crisis (GFC) and restricted mortgage availability, the Help to Buy scheme, which was introduced in September 2013, was also specifically designed to boost private house building and support the recovery of the house building industry following the crisis. Together the schemes have supported more than 32,000 households to access home ownership since 2005.^[2]

The three schemes have similar overall aims in terms of improving access to home ownership, and supporting delivery of Scottish Government policy objectives around tenure mix and social inclusion. They also use similar mechanisms to achieve this, enabling the Scottish Government to acquire an equity share in a property as a means of making the purchase more affordable and facilitating access to mortgage lending, and with the share repaid on subsequent house sale or as buyers choose to increase their equity share. However, the schemes are distinctive in terms of their specific market focus and buyer criteria, as is summarised at Table 1.

Study objectives

While monitoring of the three schemes has, to date, drawn on responses from a sales log of buyers, an evaluation was commissioned to provide more information on the schemes' impact for buyers and the wider market. The evaluation was also required to gather evidence of developers' experiences of HtB and NSSE, and on lenders and non-lenders' perspectives on the schemes.

The evaluation sought to address the following research questions.

• How effective have the Scottish Government's shared equity schemes been in helping buyers on low to moderate incomes move into owner occupation?
• What are the characteristics of buyers in the shared equity schemes?
• How satisfied are buyers with the schemes and what are their future housing intentions?
• What has been the effect of HtB and NSSE on developers' recovery and new build development following the financial crisis? This to include an assessment of the 'additionality'^[3] in new housing development supported by the schemes.
• To what extent have the schemes affected mortgage lending since the financial crisis?
• How has the housing market changed since the 2008 crisis, to what extent have the shared equity schemes affected this, and is there still a need for the schemes? This to include consideration of the schemes' direct impact on the housing market, and links with wider Scottish Government policy objectives.

The next chapter summarises the evaluation approach developed to address these questions.