First Homes Scheme- Everything You Need To Know
On the 4th of June, the government launched its First Homes scheme for first-time buyers. It is hoped that this scheme will help turn generation rent into generation buy through putting a selection of new-build homes on the market for discounted prices. The First Homes scheme first went onto the market in Bolsover, East Midlands.
More houses will become available on the 28th of June in London, and as time goes on more homes will gradually go on sale in different areas of the UK and be accessible to those that want to stay in their local communities. By the time autumn arrives, another 1,500 homes will be on the market and it is hoped that 10,000 homes will be released per year with room for more to become available depending on the demand for them.
Housing Secretary Robert Jenrick MP has said that “enabling more people to buy their own homes is at the heart of the mission of this government, and First Homes will offer a realistic and affordable route into home ownership for even more people who want to own their own home. Thanks to First Homes, we will offer more homes to local people and families, providing a route for first-time buyers to stay in their local areas rather than being forced out due to rising prices.” The scheme comes as a result of the government’s promise to deliver 1 million homes by 2024 as set out in their Conservative 2019 election manifesto.
How does the First Homes scheme work?
The First Homes scheme offers first-time buyers the opportunity to get purchase new-build homes with a minimum of a 30% discount applied. Some first-time buyers can benefit from a discount of up to 50% in certain areas.
Who is eligible for the scheme?
- To be eligible for the scheme you must be a first-time buyer and you must have a household income lower than £80,000 (£90,000 if you live in London.)
- If you are a key worker or a current or ex- member of the Armed Forces, you will be given priority access to the scheme.
- First-time buyers must use a mortgage for 50% of the value of the discounted house.
- You must not be able to purchase the house without the help of a mortgage.
- It is important to be aware that local councils can set other criteria regarding who can qualify for the scheme.
- The scheme is only available if you live in England.
What is the lowest deposit I need for the scheme?
The deposit needed for the scheme is a minimum of 5% of the discounted purchase price. The buyer will need to get a mortgage in order to fund the purchase.
Are there price caps involved?
The homes involved in the scheme are price capped. So once the discount is applied, the property prices will be set at a maximum of £250,000. (£420,000 in London.)
Can I sell my home once I have bought it through the scheme?
The discount applied to the houses will always be there, meaning that if the first-time buyer decides to sell their home in the future, then the new buyer will benefit from the same discount.
What are the advantages of the scheme?
- The scheme is a cheaper and easier way of getting onto the property ladder.
- The scheme means you have full ownership of your home.
- The scheme helps people to stop renting.
What are the disadvantages of the scheme?
- If you do choose to sell your home in the future, then depending on fluctuating house prices, you may not get much money for your house as the discount always applies. If the value of the house decreases, then you may have to sell the property for less than you originally paid for it.
- The scheme could throw the balance of supply and demand and end up pushing house prices higher in the long run.
Are there any other costs to be aware of?
If you think the First Homes scheme could be right for you, the best way to get started is to research which developers are involved in the scheme and then apply through them. You can also go to the Help to Buy website to find out more. Happy House Hunting!