Selling a House With a Shared Equity Loan in Scotland
- What a Scottish shared equity loan actually is
- The rule that catches sellers out: percentage, not pounds
- Step by step: how a shared equity sale actually runs
- The 95 per cent valuation rule
- Golden shares: when you cannot simply buy your way out
- What it costs to sell
- How long it takes
- The 20 year security rule, and why it no longer rescues you
- What if the sale price will not cover the mortgage and the stake?
- Who each route suits
- Alternatives to selling
- Risks and mistakes to avoid
- Selling a shared equity home at auction
- What to do next
What a Scottish shared equity loan actually is
Thousands of Scottish homes carry a Scottish Ministers' equity stake sitting quietly behind the mortgage. It came from one of the Low-cost Initiative for First Time Buyers schemes, usually Open Market Shared Equity, New Supply Shared Equity or Help to Buy (Scotland). Most owners barely think about it until the day they decide to move, at which point it turns into the single biggest variable in the sale.
This is the point that trips people up. It is not a loan in the everyday sense. There is no interest, no monthly payment and no balance that shrinks as you pay. It is an equity share. If Ministers funded 20 per cent of your purchase, they own 20 per cent of the value forever, until you buy them out or sell.
mygov.scot is explicit about what that means in practice: you have complete title, your name is on the title deeds, but there is a standard security on the home to protect the Scottish Government's share, and if you ever sell, the Scottish Government gets a share of the money.
The schemes differ mainly in how big the government share can be and how you got into it. The table below sets out the ones you are most likely to be selling out of.
| Scheme | How the stake was set | Typical government share | Still open to new buyers? |
|---|---|---|---|
| Open Market Shared Equity (OMSE) | Buying an existing home on the open market under LIFT | 10% to 40% (you fund 60% to 90%) | Yes, subject to priority access groups and area price thresholds |
| New Supply Shared Equity (NSSE) | Buying a new-build from a housing association or council | Varies by development | Yes, through participating landlords |
| Help to Buy (Scotland) Affordable New Build | Buying a new-build from a participating builder | Up to 15% (you fund at least 85%) | No longer open to new applicants |
| First Home Fund | A first-time buyer contribution secured on the title | Varies with the contribution made | Closed to new applicants |
| Home Owners Support Fund (Mortgage to Shared Equity) | Sold a share to your council or an RSL to avoid repossession | Varies with the rescue package | Through local authorities |
Key takeaways
- You repay a percentage of the sale price, never the pounds originally advanced.
- The percentage does not change with the market, so Ministers share the upside and the downside.
- You can sell whenever you like unless your agreement has a golden share clause.
- The administering agent must approve the price before settlement, and a 95 per cent of valuation test applies.
- You pay your own selling costs plus the agent's and Ministers' costs, and your legal fees cannot come out of Ministers' share.
- Increasing your share to 100 per cent before you sell removes the whole process, but you pay valuation, legal and admin costs to do it.
The rule that catches sellers out: percentage, not pounds
Ask most shared equity owners what they owe and they will quote the cash figure from their purchase paperwork. That figure is almost never what they will hand back.
mygov.scot gives the worked example directly. If the Scottish Government gave you 15 per cent of the purchase price and you have repaid none of it, it is due 15 per cent of the sale price. On a home bought for 150,000 pounds that sells for 170,000 pounds, Ministers are entitled to 15 per cent of 170,000 pounds. And crucially, the guidance spells out that this works the same way in reverse: if the same house sells for 130,000 pounds, Ministers are entitled to 15 per cent of 130,000 pounds.
So the government carries part of your loss as well as taking part of your gain. That is genuinely better than an interest-bearing second charge in a falling market, and genuinely worse than one in a rising market. The arithmetic below is an illustration on a single 20 per cent stake, not a statistic about any particular property.
| Purchase price | Ministers' share | Sale price | Ministers receive | Difference vs cash advanced |
|---|---|---|---|---|
| 200,000 pounds | 20% (40,000 pounds advanced) | 200,000 pounds | 40,000 pounds | No change |
| 200,000 pounds | 20% (40,000 pounds advanced) | 240,000 pounds | 48,000 pounds | 8,000 pounds more |
| 200,000 pounds | 20% (40,000 pounds advanced) | 170,000 pounds | 34,000 pounds | 6,000 pounds less |
| 200,000 pounds | 10% after a 10% buy-back | 240,000 pounds | 24,000 pounds | Buy-back captured the uplift on that 10% |
The last row is the reason people buy extra tranches. Every percentage point you own before the market rises is a percentage point of the uplift you keep. See our guide to the cost of selling a house in Scotland for how the rest of the sale bill stacks up alongside this.
Step by step: how a shared equity sale actually runs
A shared equity sale is a normal Scottish sale with an extra approval loop bolted onto it. The published After Sale Shared Equity Procedures, issued by the Scottish Government's Local Government and Housing Directorate, set out what the administering registered social landlord has to do at each stage.
- Tell the administering agent first. For OMSE that is Link Homes, the after-sales agent named on mygov.scot. For NSSE or Help to Buy it is the RSL or council that handled your purchase. Doing this before you instruct an agent saves weeks.
- Sign the disclosure mandate. The RSL sends you a mandate so it can speak to your solicitor and lender directly. Nothing moves until it comes back.
- Get your Home Report. Scotland requires one anyway, and the RSL specifically waits on a copy of the Home Report and the marketing schedule before it will progress anything. Our guide to what a Home Report is in Scotland covers what it contains.
- Arrange the valuation and letter of reliance. The agent can instruct a valuation for you, or you can use any RICS-registered surveyor, provided they will issue a letter of reliance so Ministers can also rely on the report.
- Market and take offers as normal. There is no requirement to sell to a nominated buyer on a standard agreement.
- Submit the accepted offer for approval. The RSL checks the price against the valuation and, if it passes, completes an Open Market Sale Form and sends it to the Scottish Government More Homes Division finance team.
- Settle and remit. Your solicitor settles as usual and the RSL arranges for Ministers' capital receipt to be returned.
The 95 per cent valuation rule
This is the single most useful thing to know before you accept an offer, and almost nobody tells sellers about it up front.
Two practical consequences follow. First, you cannot quietly accept a slightly lower offer from a buyer you prefer, because the RSL is checking that yours is the highest price offered. Second, if your Home Report valuation is optimistic relative to what the market will actually pay, you may need the area team to approve a below-threshold sale, which adds time.
The valuation itself has a shelf life. The procedures state that valuations are valid for a six month period from the date of issue, after which a refresh is required. If your sale drags, budget for paying for a second valuation. That is a real risk in a slow market, and one reason sellers with a stake look hard at how long a Scottish sale actually takes before committing to a route.
Golden shares: when you cannot simply buy your way out
Most shared equity owners can increase their share all the way to 100 per cent, in steps of at least 5 per cent, at which point Ministers have no stake and no claim on the sale proceeds. In some areas, though, the agreement contains a golden share clause.
mygov.scot explains that where a golden share applies, the Scottish Government keeps a share of 10 per cent of your home, and this usually only happens in areas where there are fewer affordable homes. So an owner who started on a 70 per cent share can climb to 90 per cent and no further.
Golden shares matter for selling as well as buying. The After Sale Shared Equity Procedures say a sale can take place at any time unless there is a golden share, in which case the Scottish Government LIFT buy-backs and re-sales guidance note applies instead. In plain terms, a golden share property may have to be offered through a controlled re-sale process rather than sold freely on the open market. Your solicitor should check your shared equity agreement for the clause before you list. mygov.scot says the same thing: check with your solicitor to see if your agreement has a golden share.
What it costs to sell
Both mygov.scot and the after-sale procedures are blunt about this: the shared equity owner meets all the costs, including those incurred by the administering agent and Scottish Ministers, and you will be told what those are at an early stage. There is one further sting that catches solicitors out as often as sellers.
The procedures state that the shared equity owner's legal fees are not to be deducted from the proceeds due to be returned to Scottish Ministers, and warn RSLs to watch for owners or their solicitors trying to settle on that basis. Ministers' percentage comes off the gross sale price. Your costs come out of your share.
| Cost item | Who pays | How it is usually charged |
|---|---|---|
| Home Report | Seller | Fixed fee to the surveyor, required on almost every Scottish sale |
| Valuation plus letter of reliance | Seller | Surveyor's fee, refreshed if it passes six months |
| Your selling solicitor | Seller, out of your share only | Fee plus outlays, searches and registration dues |
| Administering agent's admin costs | Seller | Quoted by the RSL or council at an early stage |
| Scottish Ministers' solicitors | Seller | Quoted at an early stage alongside the agent's costs |
| Estate agency or auction fee | Seller | Percentage or fixed, depending on the route chosen |
None of these are figures we can quote for you, because they vary by agent, council and solicitor and we do not publish numbers we cannot source. Ask the administering agent for its written cost schedule at the same time as you ask for the disclosure mandate.
How long it takes
Add the approval loop to a normal Scottish sale and you are usually looking at a few extra weeks rather than a few extra months, provided you start the conversation early. The pinch points are the disclosure mandate, the letter of reliance and, if your price falls below the 95 per cent threshold, the area team referral.
Sellers who leave the administering agent until after they have accepted an offer routinely lose four to six weeks, because the mandate, valuation and letter of reliance all have to be done from a standing start while a buyer waits. If you already know you are on a tight deadline, read how to sell urgently before you list.
The 20 year security rule, and why it no longer rescues you
There is a persistent belief among shared equity owners that if you simply hold on for 20 years, you can redeem the government's security at its original value. That was once arguable. For the main schemes it is no longer true.
The Redemption of Heritable Securities (Excluded Securities) (Scotland) Order 2018 came into force on 15 February 2019 and removed the right to redeem after 20 years for the designated shared equity schemes, expressly including OMSE, NSSE and Help to Buy (Scotland), as well as Help to Adapt, the Home Owners Support Fund mortgage to shared equity scheme, and the scheme operated by Places for People Scotland. For those schemes, a standard security in favour of Ministers cannot be redeemed after 20 years, whether it was granted before or after the Order.
The exceptions are narrow and worth checking if your purchase was unusual. The Order removes the right to redeem only for securities granted after 15 February 2019 in relation to the original Homestake scheme, the New Supply Shared Equity with Developers scheme, and certain local shared equity schemes operated by Aberdeen City Council, Aberdeenshire Council and East Dunbartonshire Council. Securities granted for those schemes before that date can still be redeemable after 20 years. Some older agreements also trigger a payment event in year 19 unless a replacement standard security is granted. If any of that might apply to you, ask your solicitor to read the agreement rather than relying on a rule of thumb.
What if the sale price will not cover the mortgage and the stake?
Ministers' share comes off the sale price, and your mortgage lender is repaid from your share. If the two together exceed what the property will fetch, you are in the same position as any other seller with a shortfall, and you need your lender in the conversation early. Our guide to selling a house in negative equity in Scotland sets out the routes, and if arrears are already building, how to stop repossession in Scotland covers what happens if you do nothing.
There is a small comfort in the percentage rule here. Because Ministers take a percentage of the reduced price rather than the cash they advanced, a falling market shrinks their claim as well as your equity. It does not fix a shortfall, but it makes shared equity a softer landing than a fixed second charge would be.
Who each route suits
There is no single right answer, and the honest test is what you actually need: the highest possible price, or a date you can plan around.
| Your situation | Likely best route | Why |
|---|---|---|
| Plenty of time, home in good order, no golden share | Open market with an estate agent | The 95 per cent test rewards a full, patient marketing campaign |
| Need a fixed date, chain risk, or a job move | Auction with a committed buyer | Removes the fall-through risk that a slow approval loop makes worse |
| Golden share clause in the agreement | Speak to the administering agent first | A controlled re-sale process may apply before open marketing |
| Price will not clear mortgage plus stake | Lender and agent together, before listing | Approvals are much harder to obtain retrospectively |
| Close to being able to buy the stake out | Increase to 100 per cent, then sell normally | Removes the approval loop and the agent's costs entirely |
Alternatives to selling
Selling is not the only exit. Increasing your share, in steps of at least 5 per cent, gradually buys Ministers out, and at 100 per cent, where no golden share applies, the Scottish Government has no share and nothing is due when you sell. You pay the valuation, legal and administration costs each time you do it, so fewer, larger tranches are usually cheaper than many small ones.
Remortgaging is possible but not automatic. You must contact the RSL or council that handled the purchase and send a copy of the ranking agreement you signed at purchase. Decisions are made case by case and additional borrowing depends on the value of the home and how much of your mortgage you have repaid. You meet all the costs, including the RSL's and Ministers' solicitors.
Renting the property out is generally not on the table. mygov.scot states the home is expected to be your sole residence and that the Scottish Government will not allow any form of subletting as a general rule. If your plan was to keep the house and let it, that plan probably needs rethinking, and selling a tenanted property in Scotland explains what changes if a tenancy is already in place.
Risks and mistakes to avoid
- Listing before you have contacted the administering agent. The disclosure mandate, valuation and letter of reliance all sit on the critical path. Start them first.
- Assuming you repay the cash figure. In a rising market that understates what Ministers are due, sometimes by a large amount.
- Budgeting your legal fees out of Ministers' share. The procedures forbid it explicitly. Your fees come out of your money.
- Accepting a lower offer from a preferred buyer. The RSL checks that the accepted price is the highest offered.
- Letting the valuation go stale. Six months from issue and it needs a refresh, at your cost.
- Ignoring a golden share clause. It can change how the property has to be sold, not just how much you keep.
- Relying on the 20 year rule. For OMSE, NSSE and Help to Buy (Scotland) it was removed by the 2018 Order.
Selling a shared equity home at auction
The approval loop is a timing problem, and auction is a timing solution. A shared equity sale has more moving parts than a standard one, which makes a fall-through more expensive: a collapsed sale can mean a stale valuation, a fresh Home Report refresh and a second run at the approval process.
When a bid succeeds through us, the buyer commits immediately and pays a non-refundable deposit. Under our SaleLock Guarantee that is 10 per cent, held against a completion date typically around 28 days later. There is no seller fee, and around 11,000 registered buyers see the lot. For a seller who has to hand an approval form to an RSL with a real date on it, that certainty is worth more than a hopeful asking price. If you want to understand the mechanics first, read how selling at auction works and the honest pros and cons.
Auction also fits the 95 per cent test unusually well, because a competitive bidding process produces demonstrable evidence that the accepted price was the highest offered.
What to do next
Dig out your shared equity agreement and the ranking agreement from your purchase file. Check the percentage, check for a golden share clause and check which scheme you are in. Then contact the administering agent named in your paperwork, ask for the disclosure mandate and a written schedule of its costs, and only then decide how you want to sell.
If a date matters more than a headline figure, get a free valuation in 60 seconds and we will tell you honestly what your property is likely to achieve at auction and whether that route suits your circumstances.
Founder & Director of Scotland Property Auction. Julie has spent over a decade helping Scottish homeowners, landlords and executors sell property quickly at auction — covering Home Reports, missives, repossession and the modern method of auction.
More about Julie →✔ Last reviewed June 2026 by Julie McAndrews. We keep our guides current with Scottish property law and market conditions.