Applying to the mortgage to rent scheme

In order to apply, the home owner must fill in an application form and submit it to the Scottish Government, along with any relevant documentation such as mortgage statement and other correspondence from her/his lender. Forms can be downloaded from the Scottish Government website, or can be obtained from Citizens Advice Bureaux and money advice centres, where an adviser can help complete the form.

When an application is received, the Scottish Government will make an initial assessment of the case based on:

• the information provided on the form

• a desk based valuation of the property, provided by the scheme surveyor, and

• a property search, commissioned by the scheme solicitor.[1]

If the application passes the initial assessment and is proved to be eligible, a more detailed assessment will be carried out. At this point, the most appropriate landlord will be identified and a Scheme 2 survey of the property instructed. A redemption statement will also be prepared, totalling the mortgage and any other loans secured on the property, any interest and charges accrued and the cost of releasing any inhibitions registered against the property. This figure will be deducted from the open market value of the home, to calculate the amount of equity held by the owner. This step will not be taken if a trustee has been appointed to the estate, or the owner does not have a capital and interest mortgage.[2]

If the detailed assessment is positive and the lender, the applicant, any other owners and the landlord all agree, the process of selling the property will begin and the applicant will become a tenant of the new landlord at the end of the process. Her/his tenancy begins on the date that the sale is finally concluded.[3]

Applicants should be advised to take independent legal advice before making a final decision, to ensure they fully understand the implications of taking part in the scheme.

The mortgage to rent scheme will not always be the most suitable option for the home owner, as there is a limit to the amount of equity that s/he can retain after all the secured loans are paid off (see below). In addition, s/he may not have the right to buy the property back later on, should her/his financial situation improve. Applicants must sign an acknowledgement on the application form accepting that the mortgage to rent scheme may not be the best option.

If the Scottish Government decides that the applicant is not eligible to take part in the scheme, the applicant will be sent a letter stating that this is the decision and explaining why. They will also be advised to speak to their mortgage lender and/or money adviser about their money problems generally.[4] However, ineligible applicants can no longer appeal against this decision. S/he can however, can make a complaint if the application is unsuccessful.  Complaints should be made to the Scottish Government's Homeowner's Support Fund Team.  The details for this team are:

Home Owners' Support Fund Team The Scottish Government Housing and Regeneration Highlander House 58 Waterloo Street Glasgow G2 7DA Tel: 0845 279 9999 E-mail: homeownersfund@scotland.gsi.gov.uk

Following the sale of the property, the applicant cannot retain more than £8,000 of capital, or £12,000 if s/he is over 60. Any additional capital beyond these amounts must be used to repay some or all of the subsidy the scheme will pay to the landlord to enable the repair and purchase of the property.[5]

For example, the property is purchased for £85,000, and once the outstanding mortgage and arrears are paid, along with a loan that was secured on the property, there is £10,000 remaining. The applicant, who is aged under 60, may retain £8,000. The remaining £2,000 will be retained by the scheme.