What is the First Homes scheme?
The First Homes scheme is a project aimed at helping first-time buyers by enabling them to buy new-build homes at a discount of at least 30% – but the discount could be higher.
What criteria apply to the First Homes scheme?
Certain criteria will apply to those looking to use the scheme, which is only available in England. For example:
- Outside London, the property must be priced at £250,000 or less after the discount has been applied.
- Applicants must be first-time buyers.
- The property must be the buyer’s main residence.
- The property must be a new-build.
- Applicants must have a household income of £80,000 or less.
- They must take out a mortgage of at least 50% of the purchase price.
What should the scheme achieve?
The scheme is aimed at helping people to buy a local home. The discount must be passed on when the property is sold again, and it can only be sold to another first-time buyer who meets the scheme criteria. Local authorities can apply further criteria if they wish to, such as the properties only being sold to key workers or local people. The Government says that it hopes that the scheme will enable properties to be more readily available to local people who will be able to live closer to their places of work.
It is expected that buyers will more easily be able to find the initial deposit – often one of the biggest obstacles for first-time buyers – whether that is 10% or 5% as the deposit will be based on the discounted cost of the property.
How do you apply for the scheme?
There is no application process for accessing the scheme, you just need to keep a lookout for builders offering First Homes plots within their developments. The first properties that are part of the scheme went up for sale in Shirebrook, Derbyshire in June this year. It is expected that a further 1,500 homes will be built in the North and the Midlands by the end of this year and up to 60,000 in total by the end of the decade. There is no deadline to take advantage of the scheme. It is open to eligible applicants wherever builders have First Homes plots available.
The First Homes scheme is one of several aimed at helping first-time buyers get onto the property ladder. Some of the schemes you can access are:
The Mortgage Guarantee scheme
A government-backed guarantee to lenders offering 95% mortgages to first-time buyers until 31 December 2022.
Help to Buy: Equity Loan
A scheme in which the government can take equity in your property of up to 20% until you pay it back.
Shared Ownership scheme
A scheme that allows you to buy a percentage of your home, between 10% and 75%, and pay rent on the remaining share. You can then buy more of the home when you can afford it.
Lifetime ISA (LISA)
A savings scheme that allows first-time buyers aged 18-39 to get a contribution of 25% on savings of up to £4,000 made in each year.
You can find out more about government assistance for first-time buyers here.
If you need help buying your first home, contact Graysons’ property experts now. You can get an estimate of your costs by using our free calculator and you can get much more information about buying your first home on our website.
Author: Caroline Murray, partner and head of conveyancing.