First-time buyers offered half-price homes under new scheme
First-time buyers in England could be offered half-price homes through a new government scheme to help people get on the property ladder.
A new government scheme offering local first time buyers and key workers a 30% to 50% discount on the purchase of their first home has launched.
Designed to help those struggling to afford a property in their local area, the First Homes initiative kicked off in the Bolsover district of Derbyshire at the end of last week.
Further sites are set to follow over the next few weeks, with an additional 1,500 homes joining the scheme this autumn.
The government has pledged a further 10,000 properties will be added to the First Homes scheme every year.
Housing secretary Robert Jenrick said: “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.”
How does the scheme work?
Under the First Homes scheme, a portion of new homes being built will be sold to first-time buyers who meet the eligibility criteria.
They will be sold at a minimum discount of 30% of the open market price, although in some cases that discount could rise to 40% or even 50%.
When the property comes to be sold again, the same discount will be passed on to the next buyer, who must also be purchasing their first property and meet the other eligibility criteria, to ensure the homes will always be available to the local community at below market value.
Prices for the first sale are capped at £250,000, rising to £420,000 in Greater London, after the discount has been applied.
Several national and regional lenders, including big names such as Halifax and Nationwide, have agreed to provide 95% mortgages on properties being purchased under the scheme.
Who is eligible for First Homes?
The scheme is available to first-time buyers in England who are either local or key workers, or in the Armed Forces.
The definition of key workers includes doctors, nurses and teachers, as well as delivery drivers and supermarket staff.
Councils will be able to prioritise homes for key workers who have supported their community through the pandemic, while they can also set their own definition of a key worker to attract people in professions that are considered to be essential to their local area.
Individual local authorities can also set a local connection test for the properties, which may include people who live or work in the area, have family connections to it or need to live there due to special circumstances, such as caring responsibilities.
The scheme is also open to all current members of the Armed Forces, as well as divorced, separated or widowed spouses, and veterans who apply within five years of leaving the forces.
If a property is being purchased by a couple, both individuals must be first-time buyers with a combined annual household income of less than £80,000, rising to £90,000 in Greater London.
At least 50% of the purchase must be funded through a mortgage.
What’s the background?
First Homes is part of the government’s wider pledge to deliver one million new affordable homes by 2024 to help more people get on to the property ladder.
It follows the launch earlier this year of the 95% mortgage guarantee scheme which aims to increase the availability of mortgages for people with just a 5% deposit.
To coincide with the launch of First Homes, the government has also started a new campaign called ‘Own Your Home’ to highlight the support that is available for people getting on to the property ladder.
The campaign consists of a series of broadcast, digital and radio adverts flagging up schemes such as the Help to Buy equity loan, Shared Ownership and Right to Buy.
It is being backed by the Own Your Home website, which acts as a single gateway for aspiring homeowners to get information on the schemes that are available and to help them decide which one is right for their needs.
Top three takeaways
- First-time buyers in England could be offered half-price homes through a new government scheme to help people get on the property ladder
- Under the First Homes initiative, local first-time buyers and key workers will be able to purchase a property at a discount of between 30% and 50% of the market price
- When the property is sold, this discount is passed on to the next buyer