First-time buyers can save up to 30% when buying a new-build home under the government's First Homes scheme, which launches today.
The government says the new discount scheme will 'provide a route for first-time buyers to stay in their local areas, rather than being forced out due to rising prices.'
Here, Which? explains how First Homes will work, including details on eligibility and alternatives.
Once the discount has been factored in, the maximum prices homes can be sold for will be capped at £250,000, or £420,000 in London.
To be eligible, you'll need to be a first-time buyer and have household earnings below £80,000, or £90,000 if you're in London.
Buyers will need to take out a of at least 50% of the property's value. The government says major banks and building societies have committed to offering high loan-to-value mortgages on homes sold under the scheme.
The following lenders have signed up so far: Chorley Building Society, Darlington Building Society, Halifax, Leeds Building Society, Mansfield Building Society, Nationwide and Newcastle Building Society.
Theoretically, First Homes are available to anyone who meets the above criteria, but local councils will have the option to prioritise specific groups of buyers.
Councils can add additional criteria for the first three months a home is on sale - for example by limiting applications to key workers or local people. If a property is still available after the three-month period, anyone who meets the scheme's main criteria can apply.
The government says the scheme will support 'fantastic key workers looking to get their first foot on the ladder' and says First Homes will be 'assets to both their owners and the local community'.
The first properties to be sold under the scheme launched today in Bolsover in the East Midlands, but it may be some time before the scheme really gets into gear.
The government says further sites will be launched in the next few weeks. It anticipates 1,500 First Homes becoming available by the end of 2021, and at least 10,000 a year thereafter.
There isn't a dedicated website or portal where you can apply for a First Home, so you'll need to do your own research locally to find out which developers are taking part.
Once you find a development offeringdiscounted homes under the scheme, you can reserve one by applying directly to the developer.
As standard, homes sold under the scheme will be available for 30% less than market value, but there is scope for councils to offer even bigger discounts.
Local authorities and neighbourhood planning organisations can give discounts of either 40% or 50% on First Homes in their area, if they can demonstrate a reason why these larger discounts are necessary.
The government intends that homes sold under the scheme will remain part of it for the long term.
When you buy a First Home, a restriction will be added to its entry on the Land Registry. This will ensure the property remains part of the scheme even when it is resold in the future.
This means you'll need to resell a First Home to an eligible first-time buyer, and that you'll need to sell it with the same percentage discount you benefited from when you bought it, regardless of whether the property has gone up or down in value.
The new scheme is sure to be tempting for cash-strapped first-time buyers struggling to get on the property ladder, but it might not be right for everyone.
First of all, the speed of the roll-out means buyers could face a battle to secure a property. Around 300,000 people bought their first home in 2020 - a figure that dwarfs the 10,000 new homes likely to be available each year under the scheme.
Tim Bannister of Rightmove says: 'There's likely to be a scramble for properties under this scheme as they become available, especially as we've already seen an influx of first-time buyers enter the market recently.
Based on current available stock levels it's unlikely there will be enough of these properties to satisfy the high levels of demand'.
In addition, buyers using the scheme may struggle to progress to buying a home outside of it in the future. The discount might enable you to buy a home now, but losing 30% of the property's value when you sell may leave you struggling to progress up the ladder.
The First Homes scheme is one of a handful of options available to prospective first-time buyers.