What Burnham's premiership could mean for Scotland's mortgage market

Scotland's mortgage market operates under a distinct set of structural pressures that no Westminster government has fully addressed, and with Andy Burnham taking office as prime minister earlier this week, brokers north of the border are watching his early moves with cautious interest.

Burnham, the former mayor of Greater Manchester, has signalled a devolutionist approach to governance and made affordable housing a stated priority.

For Alan MacKenzie (pictured top), founder and director of Your Next Step in East Kilbride, that agenda carries real significance, even if Westminster's direct reach into Scottish housing policy remains limited.

"Not too much, I don't imagine," MacKenzie told Mortgage Introducer of a new prime minister's likely impact. "Obviously, we've got our own government running our housing area here. However, I think that the two could be quite interconnected in some ways."

A system built differently

Scotland's housing market operates under a legal and transactional framework that sets it apart from the rest of the UK. Sellers are required to commission a home report – a full valuation document – before listing a property, giving buyers price certainty that does not exist in England. But the process of acquiring property is more competitive as a result, with many desirable homes going to a closing date where all offers must be submitted simultaneously.

"It's really a stab in the dark," MacKenzie said. "You've got to just fling your best offer at it and hope you get it. The issue that we have in Scotland is that lenders will mortgage against the value, so if you've got a really desirable area in Glasgow or Edinburgh and you're offering £20,000, £30,000, £40,000 over what it's worth, you've got to fund that difference yourself. And that makes it incredibly difficult for people that don't have the money to do that."

The result is a market where affordability pressures are compounded not just by interest rates and deposit requirements but by a bidding process that can price out buyers who lack savings well beyond the standard 5% minimum. As Scottish mortgage buyers are already paying significantly more than cash purchasers in several local authority areas, the practical barrier to homeownership for many remains steep.

What could Burnham's housing agenda mean for Scottish buyers?

MacKenzie acknowledged Burnham's track record in Greater Manchester, particularly around rough sleeping and social housing, had been noticed in Scotland. His instinct to devolve responsibility to local authorities also resonated, with MacKenzie suggesting it could benefit areas outside Glasgow City Council's jurisdiction.

"I'd like to think that if more powers were given to a local authority within an area like mine, then it could be a positive thing, which I think is what Andy Burnham's kind of process is going to potentially look like," he said.

On first-time buyer support, MacKenzie was direct about what is and is not working. Scotland's First Home Fund – a shared equity scheme designed to help buyers onto the ladder – has been cut to £10,000, a figure he described as inadequate. A previous sum of £25,000 had made a meaningful difference for clients. First-time buyers across Scotland continue to face significant affordability challenges in what remains a structurally difficult market.

"It has to be a sum of money that works for someone getting on the housing ladder, £10,000 is nowhere near enough," MacKenzie said. “It's not doing anything for the client, it's not getting them a better interest rate. It's nothing, so it's just not working. We used to have this, and it was £25,000, and that's a meaningful difference."

The tax question

Land and Buildings Transaction Tax (LBTT) – Scotland's equivalent of stamp duty – compounds the challenge further. Scotland's 10% LBTT band begins at £325,001, compared to £925,001 in England, meaning buyers in high-demand Scottish cities reach the higher rate far sooner.

An Additional Dwelling Supplement (ADS) of 8% – charged as a flat rate on the full purchase price and raised from 6% in December 2024 – has meanwhile made the buy-to-let market largely unviable, with MacKenzie estimating buy-to-let now accounts for a fraction of what it once represented in his firm's caseload.

"Something that we have been shouting about is the government tax charges here in Scotland," he said. "If we can make that any more manageable, then that can help people with the deposit and potentially the number that they have to maybe hit to get over the home report value here as well."

MacKenzie welcomed any signal that Burnham might introduce a meaningful shared equity or government loan scheme for England, and said Scotland would be watching closely. Supply constraints and affordability have been persistent themes in the Scottish housing market for several years, and brokers, estate agents and solicitors across the country are hoping the new administration delivers something that shifts the dial.

"As brokers, estate agents and solicitors, we all need a boost here in Scotland," MacKenzie said. "Anything positive that comes out of potential material costs that can help build more affordable homes and open up more opportunity on that front would be absolutely brilliant."