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 up to thousands of new homes, which will be sold at a minimum discount of 20% to first-time home buyers aged between 23 and 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.
To be eligible, you'll need to have a combined household income of less than £80,000 per year, or £90,000 in London, and you'll need to take out a traditional mortgage.
Many 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.
Housebuilders will also need to build a certain number of 'affordable homes' on their new developments, but the government has scrapped its requirement for starter homes to make up 20% of new housing on larger sites.
- 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?
The first starter homes will be built in 2017, and 30 local authorities have been selected to spearhead the schemes.
The 30 councils signed up to deliver the first homes are as follows: Blackburn, Blackpool, Bristol, Central Bedfordshire, Cheshire West and Chester, Chesterfield, Chichester, Lincoln, Ebbsfleet, Fareham, Gloucester, Greater Manchester, Lincolnshire, Liverpool, Luton, Mid Sussex, Middlesbrough, North Somerset, Northumberland, Pendle, Plymouth, Rotherham, Rushmoor, Sheffield, South Kestevan, South Ribble, South Somerset, Stoke-on-Trent, West Somerset and Worthing.
If you'd like to know more about when starter homes are coming to your area, 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 fifteen 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.
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: March 2017
- Updated by: Stephen Maunder