Government First Homes scheme – a guide for first time buyers and key workers

Government propose First Homes schemes to help first time buyers and key workers buy their first home

First Homes Discount

Under a new government-backed scheme, eligible first time buyers are able to purchase a new build home with a 30% to 50% discount. Initially announced in February 2020, the First Homes scheme gives people in England the chance to buy a home in their local area for less than the market price.

First Homes Discount: Overview

Buyers can look for new properties available through the First Homes scheme in their local area, with developers offering these homes to first time buyers with a discount of 30% to 50% of the market value of the property.

Each home being sold through the scheme is valued by an independent surveyor to make sure the discount is based on actual market value, and these homes cannot cost more than £250,000 – or £420,000 in London – after the discount has been applied.

When selling your home, you can only sell to someone who is also eligible to buy through the First Homes scheme. You will need to give them the same percentage discount that you received but based on the home’s market value at the time of the sale.

First Homes Discount: Applications

To apply for a property available through the First Homes scheme, you will need to contact the relevant developer, or estate agent if you’re buying from a previous First Homes purchaser, and inform them that you wish to buy through First Homes. The developer will assist you in completing the application before sending this to the local council.

You will be required to pay a fee if the home you want to purchase is a new build property, with the amount being set by the developer, but you will receive this fee back if your application in unsuccessful.

The local council will check through your application to ensure that you are eligible for the home and will contact you with their decision; they will also contact the relevant developer and your mortgage advisor.

First Homes Discount: Eligibility

The scheme aims to help people in areas of high demand, who would be unable to afford to buy a home locally without the discount. In order to buy a home through the First Homes scheme, you must meet certain eligibility criteria:

You must be at least 18 years old.
Your household income must be no more than £80,000 (or £90,000 in London).
You must be a first time buyer, meaning you have never owned another home in the UK or abroad.
You must be able to get a mortgage for at least half the price of the home.

First Homes Discount: Prioritisation

The local council may have additional eligibility conditions. For example, some councils may prioritise giving First Homes discounts to:

Essential workers.
People who already live in the area.
Those on lower incomes.

However, buyers may be exempt from some or all council conditions if they are:

A member of the armed forces.
A veteran who left the armed forces in the last five years.
The divorced / separated spouse or civil partner of a member of the armed forces.
A widow or widower of a deceased member of the armed forces (if their death was caused wholly or partly by their service).

First Homes scheme: Commonly asked questions

There are plenty of other people looking for guidance and advice on accessing the First Homes scheme. Explore the queries below for answers to some of the most common questions:

Is the First Homes scheme worth it?

Whether the First Homes scheme is a the right option for you depends on individual circumstances and housing market conditions. For first time buyers who meet the eligibility criteria and struggle with high property prices, the scheme can be a valuable opportunity to secure a home with a substantial discount, potentially making homeownership more affordable and achievable.

However, it’s essential to consider factors like location, the resale process, and long-term housing goals. While the discount may provide immediate affordability, prospective buyers should carefully weigh the benefits and drawbacks of the scheme considering unique financial situations and housing needs to determine if it aligns with their objectives.

How does the First Homes scheme work?

The First Homes scheme is a UK government initiative designed to make homeownership more affordable for first time buyers. It works by offering newly built homes at a significant discount of 30% to 50% off the market price. These discounted properties are available to local residents and key workers, ensuring that people who already live in the area benefit from the scheme.

To qualify, buyers must meet specific criteria, including income and residency requirements. Once purchased, First Homes can only be sold at the same discount percentage, maintaining affordability for future buyers. This scheme aims to address the housing affordability crisis and support those trying to get onto the property ladder, providing a more accessible route to homeownership.

What are First Homes scheme properties?

The First Homes scheme refers to properties offered under a UK government initiative aimed at making homeownership more affordable for first time buyers. These properties are typically newly built homes, and they are sold at a significant discount, between 30% to 50% below the market price. The specific types of properties available under the scheme can vary, including houses and apartments in different locations across the country.

What is the new scheme for first time buyers?

The term “new scheme for first time buyers” can refer to various government initiatives or programs introduced in different countries and regions to assist individuals in purchasing their first homes. These schemes often involve financial incentives, such as grants, loans, or discounted properties, to make homeownership more attainable for those who have not previously owned property.

The specifics of such schemes can vary widely depending on the government and region, so it’s essential to check with your local housing authorities or financial institutions for information on the latest programs available to first time buyers in your area.

Can I be classed as a first time buyer again?

Whether you can be classified as a first time buyer again typically depends on the specific eligibility criteria set by government programs or financial institutions. Generally speaking, if you have never owned or held an interest in a residential property, either in the UK or abroad, you will qualify as a first time buyer. However, the exact requirements can differ and some alternative housing schemes will accept buyers who have owned a home previously but have since sold, so it’s advisable to consult with relevant authorities or lenders to determine your eligibility.

How much deposit do you need for a first time buyer in the UK?

The deposit required for a first time buyer in the UK can vary depending on several factors, including the property price, the mortgage lender’s policies, and your financial situation. Some mortgage lenders in the UK require a deposit of just 5% to 10% of the property’s purchase price. However, having a larger deposit, ideally 15% to 20% or more, can often result in more favourable mortgage terms and lower interest rates. Various government schemes, such as Help to Buy (which closed in March 2023) and Shared Ownership, may also influence the required deposit amount, so it’s essential to research your options and consult with mortgage advisors to determine the best approach for your specific circumstances.

Is it necessary for both partners to be first time buyers if you’re purchasing together through the First Homes scheme?

Absolutely. In the case of joint purchases in the First Homes scheme, all buyers involved must meet the first time buyer eligibility criteria, meaning that they’ve never owned a property in the UK or abroad.

Are there any limitations on property prices in the First Homes scheme?

Certainly. The First Homes scheme enforces property price caps to ensure affordability. Properties cannot exceed £250,000 (£420,000 in London) after applying the discount. While local authorities may have the authority to lower these caps in their areas, they cannot raise them.

What is the required deposit for the First Homes scheme?

To participate in the First Homes scheme, you’ll need to secure a First Homes mortgage. Lenders like Halifax offer 95% mortgages for First Homes. For example, if you’re buying a First Homes property valued at £175,000, you’d need a minimum 5% deposit of £8,750.

To find out more about other home-buying options such as Shared Ownership, Deposit Unlock, Rent to Buy and more, visit our article index for informational features and blog, or check out our helpful FAQs and guides. Alternatively, you can start your search for a new home on Share to Buy’s property portal today!