Western Isles MSP recieves government support questioning banks stance on crofter mortgages

Western Isles MSP Alasdair Allan’s campaign to get banks to recognise the rights of crofters to apply for mortgages has resulted in Crofting Minister, Stewart Stevenson, writing to the banks asking for them to address a “misunderstanding” on their part about the situation which is denying some crofters a mortgage.

Alasdair Allan commented:

“A number of crofters have contacted me to complain that they were refused a mortgage or loans on the grounds that, they were in receipt of a grant from the Croft House Grant Scheme (CHGS).

“I took this up some time ago with the  Royal Bank of Scotland who  said this was because were concerned they would have no right to the house in the event that the loan was not repaid. They claimed this was because the Scottish Government would have “first ranking” – i.e. the right to claim the house before anyone else.

“However, this advice appeared to contradict the position of the Scottish Government, which is that, in most normal circumstances they do not in fact make any such claim on the property. On raising the issue with crofting minister Stewart Stevenson, he has now confirmed this position and said that he is ‘dismayed’ by the Royal Bank’s claims.

“Mr Stevenson has now written to the Committee of Scottish Clearing Banks to clarify with mortgage lenders what the Scottish Government’s stance actually is.

“This is, that for people seeking a loan, and who are in receipt of a grant under CHGS (in operation since 2005), the Government makes NO claim on the property and there is no issue with ‘ranking’. For people seeking loans who are in receipt of loans provided under the old Crofters Building Grants and Loans Scheme (CBGLS), there is a security which requires to be ranked. However, this should only become an issue when people seek to re-mortgage the property while still paying the Government back the CBGLS loan. Even then, the Government has extended its policy of taking second ranking in very many circumstances, so long as the new mortgage is for building or improving a croft house.

“In short, I believe that many banks need to revise their policy so that it accurately reflects the government’s stance on this subject. It’s difficult enough to get a mortgage as it is these days without banks introducing new obstacles.”

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