PLEASE NOTE – Applications for Help to Buy were to be submitted by 31st October 2022, and is no longer available to new applicants.
What is the First Homes Scheme?
The First Homes Scheme is a positive government initiative delivering on the pledge to help people get on the property ladder. The Scheme will build one million new affordable and attractive homes in the UK, putting home ownership within reach for more people.
Otherwise known as the New Homes scheme, the First Homes Scheme launched on 4 June 2021.
How does the First Homes Scheme work?
Put simply, the First Homes Scheme gives First Time Buyers a big discount on new build properties. Discounts will be at least 30% compared to the market price.
The idea is to help people find a home in their local area, with an emphasis on First Time Buyers and key workers. The benefit is that local communities get to keep important key workers, and it helps people stay in the area where they grew up and stay close to friends and family.
Where are the First Homes available?
The first First Homes properties are now on sale in Bolsover, East Midlands. Further sites will launch across the country in the coming weeks, and 1,500 are due for release by the end of 2021. The plan is to release at least 10,000 First Homes per year, although this could increase if there is a lot of demand.
Who is eligible for the First Homes discount?
The 30 to 50 percent discount will be available on both houses and flats. To qualify, you must be a First Time Buyer. You’re not eligible if you have ever owned a property in the past, including inherited properties or gifted properties.
There is also a maximum income level. If you earn more than £80,000 or (£90,000 in London) you cannot access this scheme.
Property price caps apply too. In London, once the discount has been taken off, the maximum price is £420,000, while everywhere else it is £250,000.
The scheme operators also want people that are applying for the scheme to have a local connection to the area. We don’t yet know what this means in specific terms. There will be priority for key workers such as NHS employees, police, fire fighters, teachers and delivery drivers.
What happens when you sell a First Home?
One of the big benefits of this scheme is that the discount continues into the future. So when you sell your First Home, the same percentage discount is available to future First Time Buyers. So these properties will always be sold below market value, making them more affordable.
On the negative side, that means there’s less of a big profit to make when you sell your property. However, it’s been said that if the home is on the market for six months without a buyer, you may be allowed to sell it on the normal market. But that is unlikely to happen – demand is likely to be huge for properties like this.
Your next move then might be sideways – to own a property of the same size, or perhaps a little bigger, but paying more on your mortgage.
Speak to an expert
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When will there be First Homes in my area?The government has asked developers to ringfence 25% of all new homes for this scheme, so more will become available in your local area over time. It will be competitive, though, so you need to keep an eye out for these properties in new developments.
Is First Homes the best property scheme for me?There are many government schemes now, which makes it increasingly difficult to know which one is right for you. There’s the Help to Buy government scheme, First Homes, Shared Ownership, Right to Buy and more.
To help you compare and decide what will suit you best, visit the Own Your Home website which explains how they all work and helps you narrow down the options.
Will it be easy to find a mortgage?Various lenders have announced that they are working with the government on this scheme and will offer high Loan to Value mortgages to support First Time Buyers.
What that means is that you can potentially buy a property with a 5% deposit, so you won’t need to save up such a large amount to get on the property ladder. We would always encourage you to try and aim for a 10% deposit, however, particularly if you’re getting a discounted house price.
Will the First Homes Scheme be worth it?Anything that helps First Time Buyers get on the property ladder has got to be a good thing. It’s better to launch a scheme like this than to have people be stuck in the rental market and unable to get on the housing ladder.
What we do want is for people to be able to move on – otherwise people will buy these homes and not be able to leave them. Clients that opt into the scheme need to be educated and aware of what they need to do to move on and access the wider property market. That’s relevant to both this scheme and Help to Buy.
How do I apply?If you want to apply for a First Home you need to keep your eye out for properties coming on the market in your area. At the moment, the Bolsover district in the East Midlands is the only First Homes site.
The government website will update on the next sites to go on sale and this will be reported in the press. We will also post about it on our social media.
How can a mortgage broker help?With any mortgage advice, we are here to navigate the market and do the hard work for you.
We explore what you need and find the most suitable lender for you. We’ll compare all aspects of the mortgages out there – and it’s not all about the rate. It’s about so much more than that.
And if you are getting on the property ladder for the first time, it can seem complicated. Be sure to ask your broker as many questions as you need. We know the process and the jargon can be confusing.
We are here to make your life easier and make a stressful experience into something enjoyable. We’ll help you feel empowered and educated, to achieve your goals.
For an initial chat about anything linked with mortgages and property, just get in touch.