1. HEEPS EQUITY LOAN
5th May 2017
Neil Leckie
Care & Repair Conference

2. Summary
The HEEPS: Equity Loan is a pilot scheme funded by the Scottish Government which aims to help homeowners improve the energy efficiency of their property and carry out essential repairs.
Launched January 2017
The scheme allows individuals to obtain a loan which will be secured against their property. There are no monthly repayments.
Open to homeowners with properties in the Argyll & Bute, Glasgow City and Perth & Kinross local authority areas.
Energy Saving Trust have teamed up with the Care and Repair to deliver the scheme on behalf of the Scottish Government.

3. Background – Purpose of Scheme
Cover any gaps in funding
Help for private owners in mixed tenure blocks
Improve housing stock
Save carbon and energy
Make energy efficiency and repairs more accessible
No upfront costs – any fees can be added to loan
No monthly repayments – repaid when sold or applicant dies
No credit check required
Allow individuals to keep their home
“Asset rich, cash poor”
Create a habitable living space – improved quality of life

4. What is an equity loan?
An equity loan allows homeowners to borrow money which is secured against their property
The amount borrowed is translated into a percentage equity stake of the total value of the property (for example, borrowing £10k on a property valued at £100k will mean the owner giving up a 10% stake)
Unlike other loans there are no upfront costs or ongoing repayments

5. Who can apply?
The scheme is open to owner-occupiers and private landlords with a property in one of the three pilot areas
Property should be in council tax band A-C
If the property is in band D or above a permanent occupier needs to be in receipt of certain qualifying benefits (see website)
Landlords must be a natural person with no more than 2 properties to rent

6. Key Conditions of the Scheme
Maximum loan value is £40,000 but cannot be more than 50% of the property’s estimated market value
Applicants must have sufficient equity in their property, and must retain at least 30% equity after the loan is taken out
All successful loans will be subject to an administrative fee of £671. Further fees may apply but can be added to the loan
At least 55% of the loan amount must be towards energy efficiency work (see next slide)

7. Examples of improvements covered
Energy Efficiency (>55%)
Repairs (<45%)
Central Heating Systems
Repairs to roof structure
Insulation (loft, walls, floor)
Rainwater goods
Renewable Technologies
Damp prevention
Glazing (double, secondary)
External wall repairs
Low energy lighting
Ventilation systems
Draught Proofing
Chimney stacks
Any repair that reduces heat loss through the building fabric and/or reduces damp or moisture penetration could be classed as energy efficiency work

8. How much is repaid?
The amount repaid is based on the equity stake held by the Scottish Government.
However, a cap is set at 2.5% APR to protect homeowners from sharp increases in property prices
The amount repaid will be the lesser of:
The Scottish Government’s agreed equity share of the property’s sale price
The loan amount if it had been a commercial loan at 2.5% APR for the duration of the agreement

9. Repayment Example – above cap
You borrow £10,000 against your property’s estimated value of £100,000
This means the Scottish Government have a 10% stake in your property
If you sell your property in 5 years for £120,000, the 10% equity stake would now be worth £12,000
A commercial loan of £10,000 taken out at 2.5% APR payable over 5 years would result in an overall payback of £10,648
The lesser of the two figures is to be paid back, so you would repay £10,648

10. Repayment Example – below cap
Taking the previous example, you borrow £10,000 against your property’s estimated value of £100,000
This means the Scottish Government have a 10% stake in your property
If you sell your property in 5 years for £105,000, the 10% equity stake would now be worth £10,500
A commercial loan of £10,000 taken out at 2.5% APR payable over 5 years would result in an overall payback of £10,648
As this is below the level set by the cap, you will simply pay back 10% of the sale price, or £10,500

11. Benefits over other equity schemes
Backed by reputable organisations
Scottish Government
Energy Saving Trust
Care and Repair
Impartial advice and assistance throughout the process
Rules in place to protect applicants
Must maintain 30% equity after loan
Cap in place to protect against property price hikes – will not need to pay back significantly more than borrowed

12. Going Forward Working to make the scheme a success
Help to spread the word
More information:
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