A new interest-free loan of £10,000 for first-time buyers in Scotland “is not a silver bullet” for the housing crisis, one of the lenders behind the scheme has warned.

The Scottish Government launched the First Homes Fund earlier this week – on June 24 – claiming that 2,000 would take it up in the first 100 days.

While the scheme has been largely welcome, it has come under fire for failing to offer the true extent of support that the market requires.

Supply challenges

Louise Drummond, National Intermediary Development Manager of Leeds Building Society, told The Neg: “The First Homes Fund is a constructive intervention and has been widely welcomed by housebuilders, advisers, and market participants.

“But it is not a silver bullet. Scotland, like the rest of the UK, continues to face supply challenges, affordability pressures, and demographic shifts that require long‑term policy focus.”

It is not a silver bullet. Scotland, like the rest of the UK, continues to face supply challenges.”

In particular, Drummond questioned whether the support being offered stretches far enough in higher priced areas.

As such, it “may not materially shift affordability” for buyers facing larger deposit gaps, she adds.

During this Parliament, some 50,000 applications for the First Homes Fund scheme are expected.

It means the annual funding pot could be exhausted rapidly, leaving many buyers still unsupported.

The First Homes Fund offers first-time buyers £10,000 towards a property priced up to £300,000.

It covers both new-build and second-hand purchases. The Government takes an equity stake in return, repaid when the home is eventually sold.

Shared equity

Drummond adds: “Shared equity plays a meaningful role in the housing market and can help bridge the deposit gap without over‑stretching borrowers.

“Now is the time for brokers to identify clients who are close to being deposit‑ready and could benefit from the £10,000 boost. These buyers will be best positioned to take advantage of the scheme before funding caps are reached.

“Because the government’s equity share is repaid based on future property value, brokers will need to ensure clients understand the implications for future equity, remortgaging, and onward moves.”

“Given historic demand for similar schemes, brokers should prepare clients for the possibility that funding windows may be short, and that readiness to proceed will be a competitive advantage.”