Help to Buy scheme runs out of money in Scotland

The Scottish government's Help to Buy scheme has run out of money for this financial year - only three months after a new round started.

All the funds for the central area of Scotland have now been allocated - accounting for 80% of the funding.

Anyone hoping to get a Help to Buy there before next April will now have to find the extra money elsewhere or let their house deal fall through.

The government in April set aside enough money to fund 2,000 home deals.

By the start of July, there were only 600 deals available.

Within the last 10 days, all the contracts for the central belt, Argyll and Bute and the Scottish Borders have been signed, with only a few remaining in Aberdeen, Inverness and Orkney.

Out of the blue

Help to Buy Scotland is designed to help homebuyers own 100% of their new home through obtaining up to a 75% mortgage with as low as a 5% deposit.

Scott Kennedy from the mortgage firm Lifetime Planning says the news that the funding will no longer be available for most of the country has come out of the blue.

"These people potentially have been planning this for a very long time and, within 10 days, the scheme has literally closed, so there will be a number of people who will be upset by this there's no question," he told BBC Scotland.

The Scottish government said demand for the scheme had been "extremely high" and minister had already allocated an additional £50m to the scheme this year, taking total funding to £275m.

"More than 2,000 homes have been purchased through Help to Buy Scotland to date with an additional 2000 likely to be completed by the end of the financial year. All applications that have so far been approved will proceed," said a spokeswoman.

"We are also actively considering how further demand can be supported in this financial year.

"In the meantime, if people who have not yet had an application approved are considering buying a house through the scheme, they should in the first instance contact the agents managing the scheme to check availability."

A total of £140m was set aside for this financial year and, from April 2015, a smaller amount of money - just £100m - is due to be available.

'Extremely disappointing'

With demand at current levels, it is likely that those funds will quickly become allocated.

The Scottish government told house builders about the shortage at the beginning of July and clarified that no more money would be made available.

Industry body Homes for Scotland responded by saying: "This news is extremely disappointing as it follows a recent meeting with a small group of the Homes For Scotland board and Deputy First Minister Nicola Sturgeon to voice our concerns regarding the budget situation and the need for a longer-term scheme."

For those who had been planning to buy a new home in the next nine months, or were even close to signing a deal, the news that the money has run out will be particularly harsh.

Many buyers have been proceeding on the basis that they would get that extra 20% from the government, so it is likely that a number of deals will now fall through.

That will not only cause problems for house buyers but will have a knock-on effect on house builders, who will find it harder to sell the new homes they are building.