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Low-cost Initiative for First-Time Buyers: New Supply Shared Equity Scheme Administrative Procedures

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Annexe H: Financial reconciliation - equity stake increases

This example shows what would happen if an owner in a Type 1 project decides to increase the equity stake in their property from 60 per cent to 85 per cent and then from 85 per cent to 100 per cent. There is no golden share over the property.

£

Open market valuation (2 years after the initial purchase)

130,000

Owner's equity stake (60 per cent of £130,000)

78,000

The Scottish Ministers' equity stake (40 per cent of £130,000)

52,000

Owner then increases their equity stake to 85 per cent:

Owner's new equity stake (85 per cent of £130,000)

110,500

Owner's receipt to the Scottish Ministers (£110,500 - £78,000)

32,500

The Scottish Ministers' equity stake decreases to 15 per cent:

The Scottish Ministers' new equity stake (15 per cent of £130,000)

19,500

Registered social landlord pays the receipt to The Scottish Ministers (£52,000 - £19,500)

32,500

Open market valuation (4 years after the initial purchase)

150,000

Owner's equity stake (85 per cent of £150,000)

127,500

The Scottish Ministers' equity stake (15 per cent of £150,000)

22,500

Owner then increases their equity stake to 100 per cent:

Owner's new equity stake (100 per cent of £150,000)

150,000

Owner's receipt to the Scottish Ministers (£150,000 - £127,500)

22,500

Registered social landlord pays the receipt to the Scottish Ministers:

22,500