5 min read
The First Homes Scheme helps local first-time buyers and keyworkers get onto the property ladder. Find out more about the scheme and if you could be eligible.
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The First Homes scheme is a government initiative in the UK designed to help first-time buyers purchase their first home at a discounted price. In this guide, we’ll explain what the First Homes scheme is, how it works, the eligibility criteria, and how you can take advantage of this opportunity to buy your first home.
In this article:
The First Homes scheme is an affordable housing initiative launched by the UK government to help first-time buyers get onto the property ladder. Under this scheme, newly built homes are available at a discount of at least 30% off the market price. The homes are offered to eligible buyers through local councils or housing developers.
The scheme is aimed at first-time buyers who meet specific criteria, and it is available on a wide range of properties across England. The discount is intended to make homeownership more affordable for those who may struggle to purchase at full market value.
You’ll need a minimum of 5% of the discounted price as a deposit. The discounts will apply to the homes forever, meaning that generations of new buyers and the local community will continue to benefit every time the property is sold.
There are certain criteria that need to be met in order to qualify for the First Homes Scheme:
You must be 18 years old or over.
You must be first-time buyers and must have a household income not exceeding £80,000 and £90,000 in London (or lower if set by the local authority).
Post-discount price caps on first sale of the property of £250,000 across England and £420,000 in London (or lower if set by the local authority).
A First Home should be your only home and you will need to use a mortgage or home purchase plan for at least 50% of the purchase price of the home.
Local connections and/or key worker status as determined by the relevant local authority, where local key workers are prioritised.
There is an exemption to making the local connection criteria: members of the Armed Forces and recent veterans do not need to meet any local connection or key worker requirements set by local authorities.
There are some limitations to the scheme that makes it stand out from previous help to buy schemes
It’s only available in England.
The house you buy can only be a new home built by a developer, or a home you buy from someone else who originally bought it as part of the scheme.
There are only a few locations across the country that offer the First Homes Scheme currently. A programme of 1,500 First Homes is being rolled out over the next 2 years in over 100 locations across England. First Homes should also start becoming available on new construction sites across England as developers and local authorities begin to incorporate new planning policies. (Check with your local authority to see if they are offering the First Homes Scheme)
You can usually only apply if you are a local resident or a local keyworker.
The biggest advantage of the First Homes Scheme is that unlike shared ownership schemes, you have full ownership of your home. If this is a house, it means you’ll own the freehold. If it’s a flat, it means you’ll own a leasehold on the property.
Other benefits of the First Homes scheme are:
Affordable homeownership:
The 30% discount significantly reduces the overall cost of purchasing a home, making it more affordable for first-time buyers.
Lower deposit and mortgage:
Because the property price is discounted, you’ll need a smaller deposit and can secure a lower mortgage, making it easier to enter the property market.
Long-term affordability:
The discount remains on the property when it’s resold, ensuring that future buyers can also benefit from reduced prices.
Accessible in high-demand areas:
The scheme helps make homeownership possible in areas where house prices are often too high for first-time buyers to afford.
Be careful you aren’t paying too much. Newly built homes are likely to come at a premium and you may find something older and cheaper on the open market in the same area. In areas with higher prices, such as commuter towns and cities, this scheme could make a big difference to the lucky few who are eligible and act quickly.
Also, as the scheme is very new, there is limited availability at the moment, so competition will be high.
The Help to Buy Equity Loan Scheme was closed to new applicants on the 31st October 2022. Before this, you were unable to use them schemes in conjunction, as they provide alternative government help to assist first time buyers.
The First Homes discount is applied to the property on its first purchase, and then the discount stays with the property every time it is resold. This is so that it can help generations of new buyers and the local community can continue to benefit every time the property is sold.
The same buying criteria will always apply, so you will need to sell your home to another first-time buyer who fits the scheme’s criteria, with the same discount you bought it with.
Applying for a home through the First Homes Scheme UK involves a few steps:
Check your eligibility:
Review the eligibility criteria outlined above. You’ll need to meet the income limits and be a first-time buyer to apply.
Find available properties:
Search for homes available under the First Homes Scheme through participating developers or local housing authorities. You can check with local councils or developers for available properties in your area.
Secure a mortgage:
Once you’ve found a property, you’ll need to secure a mortgage. Lenders are familiar with the scheme, and the reduced price means you may be able to get a better deal on your mortgage.
Make an offer:
If you’re eligible and have found a property, you can make an offer. The property will be sold at a discounted price, but you’ll need to negotiate the terms with the developer or housing association. A conveyancer will be able to help you with these negotiations.
Complete the purchase:
Once everything is in place, you can complete the purchase. Your conveyancing solicitor will help guide you through the legal process of purchasing your first home under the First Homes Scheme.
You will need to act fast. As this scheme is only applicable to a limited number of houses across England, there will be big competition to secure a home at the discounted rate.
If there aren’t any First Homes near you, or you aren’t eligible to a apply for one, there are other government schemes available to help you buy a house. These include Shared Ownership, Deposit Unlock, Lifetime ISAs and 5% deposits.
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