The government’s First Homes scheme is offering first-time buyers up to 50% off new build houses, as a cheaper way onto the property ladder.
First-time buyers in England could now find it easier to get onto the property ladder, through the government’s new First Homes scheme. The first group of homes available through the scheme went on the market near Bolsover, East Midlands, on 4th June 2021, with thousands more set to be delivered around England in the upcoming years.
How much money can first-time buyers save through the First Homes scheme?
Homes are discounted by at least 30% compared to the market value. A discount will also apply when the home’s being sold in the future. Every First Home will have a restriction registered on its title at HM Land Registry, to make sure the discount (determined by current market value) can be applied every time the title is transferred. Therefore, the First Homes scheme will benefit local first-time buyers for years to come.
The government is allowing local authorities and neighbourhood planning groups to offer a higher minimum discount of 40% or 50%, if they can show a need for it.
How many First Homes will be available?
1,500 more homes will be available around England from the end of 2021. Following that, a minimum of 10,000 homes will be delivered each year. If demand exceeds this, the government says that they will provide even more homes through the scheme.
Who’s eligible for the scheme?
General eligibility criteria
People in England that are buying a home for the first time can use the First Homes scheme.
Your annual household income must be £80,000 or below (£90,000 or below in Greater London) in the tax year before the year you’re buying the property in. This applies whether you’re buying alone or with someone else. Local authorities can set a lower income cap.
You’ll need a deposit of at least 5% of the discounted purchase price.
Properties on the scheme must be priced at £250,000 or lower after the discount has been applied (or £420,000 maximum in Greater London). Your mortgage or home purchase plan must fund at least 50% of the discounted purchase price.
Local eligibility criteria
Local authorities or neighbourhood planning groups will be able to prioritise local people and key workers for First Homes properties. This could be based on:
- A local connection test.
- Employment status.
- Locally-set income caps.
Local eligibility criteria will be applicable for 3 months, starting from the date the home is first put on the market. If the home isn’t reserved by that point, the criteria will be removed and the property will be open to purchase by anyone that meets the basic eligibility criteria.
Members of the Armed Forces and recent veterans don’t need to meet any additional criteria set by local authorities or neighbourhood planning groups.
How to apply for the First Homes scheme
Check that the house you want to buy is being offered through the First Homes scheme. If it is, you can then apply for the scheme through the builder, providing you meet the eligibility criteria.
There’s no deadline for the scheme. However, demand for the scheme is expected to be high, according to the HomeOwners Alliance. So, you may want to get involved as soon as possible.
How can to get a mortgage for the First Homes scheme
On the scheme’s launch day, seven banks and building societies announced that they will offer 95% loan-to-value mortgages for properties, in order to support the First Homes scheme. This means people buying through the scheme will need a 5% deposit; this is less than they might need for other mortgages. So, the scheme will be even more accessible to first-time buyers.
The banks and building societies offering these high loan-to-value mortgages are: Halifax Bank and Nationwide, Chorley, Darlington, Leeds, Mansfield and Newcastle building societies.
Once you’ve applied for a mortgage in principle,
How can I find the best government home ownership scheme for me?
The First Homes scheme is the latest step in the government’s commitment to deliver 1 million homes by 2024. Through planning obligations, First Homes should make up 25% of all affordable housing units supplied by developers.
Additional support currently on offer includes a low-deposit mortgage scheme, in addition to a stamp duty holiday until September 2021. Read more on our Homeowner Advice Centre. You can’t use the Help to Buy scheme in conjunction with the First Homes scheme.
You can find out which government home ownership schemes suit you by completing the questionnaire on the Own Your Home website.