Starter Homes Initiative
By Marie Kemplay
Starter Homes Initiative
Find out what we know about the Starter Homes Initiative so far. Could it help you buy your first home?
The Starter Homes Initiative will see the creation of 200,000 new homes, which will be sold at a minimum discount of 20% to first-time home buyers under the age of 40.
How does the Starter Homes Initiative work?
The initiative will allow first-time buyers to purchase new homes priced up to £250,000, or £450,000 in London, at below market value.
The majority of the new homes will be built on underused or unviable brownfield land, which the government will release to developers free from planning costs. Brownfield land tends to be vacant space that has previously been used for industrial or commercial purposes.
The plans have proved popular within the construction industry, with more than 30 house builders having indicated that they will support the initiative.
- If you're thinking about buying your first home, you can get some initial advice about mortgages by contacting Which? Mortgage Advisers on 0808 252 7987.
When will the first starter homes be available?
Not for a while. House builders are being encouraged to purchase and prepare the first sites for development in 2016/17, but there is no indication yet as to where these sites might be.
Having said that, the government has set some money aside to speed things up. In January 2016, two new funds were announced – a £1.2bn Starter Home Fund to prepare sites for the first 30,000 new homes and a £6.3m fund to revive brownfield sites in key housing zones.
If you'd like to know more, you can register your interest in the scheme and receive official updates as they're announced.
Is the Starter Homes Initiative right for me?
The Starter Homes Initiative is an attractive opportunity for first-time homebuyers who can't afford to pay full price for a property.
In addition to a substantial discount, homebuyers will also be able to enjoy the benefits of buying a new-build property, including improved energy efficiency and lower maintenance costs.
Starter homes might not be the best option for those who are looking to move up the property ladder quickly, however, as homes can't be sold on at full market value until five years after they are purchased.
There is also a concern that if property prices continue to increase, first-time buyers might still struggle to afford the new homes, even with the discount.
Find out more: buying your first home can be a daunting experience. Make it easier with our first-time buyer guide.
Is the Starter Homes Initiative my only option?
If the Starter Homes Initiative isn't right for you, there are other schemes you can use to get on to the property ladder.
Help to Buy equity loans allow buyers to pay a 5% deposit on a new-build home and take out a 75% mortgage, with the government offering a loan for the remaining 20% of the value of a property.
Alternatively, a Help to Buy mortgage provides a government guarantee on a mortgage of over 80%, making first-time buyers a lower-risk option for lenders and thus unlocking better rates. Unlike Help to Buy equity loans, a Help to Buy mortgage is not limited to new-build homes. The scheme runs until the end of 2016.
If you can't afford to buy outright, shared ownership could be an option. This involves buying a share of a property between 25% and 75% and paying rent on the remaining share. Some shared ownership schemes also allow you to increase your share at a later date, allowing you to build towards full ownership.
You can find out about the different mortgages that might be available to you by contacting Which Mortgage Advisers on 0808 252 7987.
- Last updated: August 2016
- Updated by: Marie Kemplay