What is the First Homes scheme?
The First Homes scheme offers first-time buyers a discount when they purchase a new-build home in England.
First Homes must be sold at a discount of at least 30% against their market value.
After the discount has been applied, the maximum amount First Homes can be sold for is £250,000, or £420,000 in Greater London. Local authorities can impose lower price caps if they wish.
Not all new-build properties are available under the scheme, but the government says First Homes must account for at least 25% of affordable housing sold by developers.
Who can use the First Homes scheme?
The First Homes scheme is available exclusively to first-time buyers in England.
To qualify for the scheme, you'll need to have had a household income of £80,000 or less (£90,000 or less in Greater London) in the tax year before purchasing the property.
You'll also need to take out a mortgage of at least 50% of the purchase price of the property.
- Find out more: how much mortgage can you borrow?
Will local people get priority?
This isn't a standard rule of the scheme, but local authorities can choose to add their own requirements - such as applicants having a local address or being key workers - for the first three months that properties are on sale.
If the homes remain unsold after this time, these conditions will be removed meaning any eligible first-time buyers can apply.
How do I apply for the scheme?
There isn't a dedicated website or portal where you can apply for a First Home.
Instead, you'll need to do your own research and find out which developers are taking part.
Once you find a development offering discounted homes under the scheme, you can reserve one by applying directly to the developer.
Although the scheme launches on 4 June 2021, the majority of properties haven't yet have been built, so it may be some time before it really takes off.
- Find out more: buying a new-build home
Could I get a bigger discount?
First Homes must be sold at a discount of at least 30% of their market value, but there is scope for some people to save even more.
Local authorities have been given the power to apply for bigger discounts of 40% or 50% on properties in their area, if they can demonstrate a need to do so to the government.
What happens if I sell a First Home?
When you buy a property under the scheme, a restriction will be added to its Land Registry entry, which will ensure the property remains part of the scheme even when it is resold.
Ultimately, this means anyone reselling a First Home will need to sell to another first-time buyer who also qualifies for the scheme.
You'll need to resell the property with the same percentage discount you bought it for. So, if you bought your home with a 30% discount, you'll need to sell it for 30% less than the market value when you come to list it for sale.
- Find out more: how to sell your house
Alternatives to the First Homes scheme
The First Homes scheme is one of several options available to first-time buyers looking to get on to the property ladder.
- The 95% mortgage guarantee scheme allows first-time buyers to get a low-deposit mortgage. Getting a standard mortgage with a 5% deposit means you won't be limited to buying a new-build property, but can instead look at the whole market.
- The Help to Buy scheme offers a 20% equity loan (40% in London) from the government on new-build properties in England. It is now limited to first-time buyers only, and regional price caps apply. Wales has its own version of Help to Buy, but Northern Ireland and Scotland don’t currently offer it.
- A shared ownership scheme could offer you a route on to the ladder in an expensive area such as London. These schemes involve purchasing a stake of as little as 25% of a property and paying rent on the remainder. A word of warning, though – the overall monthly costs of shared ownership schemes can be high.