Allowing you to purchase a home for 30% or 50% less than its market value, the First Homes scheme offers first-time buyers in England a competitive way to get onto the property ladder.
Here, we outline First Homes in a little more detail, and answer buyers’ most pressing questions about the scheme, including where it’s available and who is eligible.
Buying a property using the First Homes scheme
Allowing you to purchase a home for 30% or 50% less than its market value, the First Homes scheme offers first-time buyers in England a competitive way to get onto the property ladder.
Here, we outline First Homes in a little more detail, and answer buyers’ most pressing questions about the scheme, including where it’s available and who is eligible.
What is the First Homes scheme?First Homes is a Government initiative launched in June 2021 with the aim of helping first time buyers in England to get onto the property ladder in the town or city in which they live.
How does First Homes work?
Under First Homes, eligible first-time buyers have the option to purchase a new build home, direct from a participating developer, for at least 30% less than its market value. This property can be either a leasehold flat or a freehold house.
To ensure the asking price of the property is in line with current market values, an independent surveyor will asses the property to determine its value. The discount is then proportionally applied to the full asking price of the property.
Another route onto the ladder with the First Homes scheme is to buy a secondhand home that was previously purchased by a first time buyer using the First Homes scheme.
If you take this option, the seller is obliged to offer you the same level of discount they benefited from when they purchased the property originally. As with buying new, this discount is applied to the property’s current market value.
Who is eligible for First Homes?
First Homes is open to first-time buyers in England who are aged 18 or over.
This means that you can’t access the scheme if you already own a stake in another property,or have done so at some point in the past.
Properties purchased using the scheme cannot exceed £250,000 in value (£420,000 if you’re buying in London) after the discount has been applied.
To purchase an eligible First Homes property, you’ll also need:
- To be living and/or working in the town or city in which you intend to buy. This could mean that you’re privately renting, in council accommodation, or living with family.
- A total household income of no more than £80,000 or £90,000 for London purchasers.
- A mortgage agreement in principle for at least half the value of the home you wish to purchase.
Under the rules of the scheme, some professions such as key workers and members of the armed forces are also given priority for available homes above other applicants.
This means that if you’re a teacher, a nurse, a paramedic, or in the police or fire brigade, for example, your application will take priority. The same applies to current serving members of the armed forces, as well as veterans.
How do I use the First Homes scheme?
If you meet all of the criteria of the scheme you can begin a search for properties in your area. Remember, you’ll either have to purchase a new build home direct from a developer that offers the scheme, or a First Homes resale property.
Once you’ve identified a property you like and can afford, you’ll then have to complete an application process. This involves completing a form which is then submitted to the local council of the borough in which you’re buying.
The property developer (or estate agent if you’re purchasing a First Homes resale) along with your mortgage broker will help you to complete this paperwork.
If you’re buying new from a developer, you will also need to pay an application fee. This isn’t a fixed cost and is set by each developer, so you may want to investigate this in advance. The positive news is that you’ll receive this fee back in full should your application not be successful.
Once received, the council will assess your application to ensure you meet all of the eligibility criteria for First Homes. They’ll be in touch to confirm their decision, as well letting the developer and your mortgage lender know the outcome.
If everything goes to plan and you get accepted you can then begin your full mortgage application as well as appointing a conveyancer to take care of all the legal paperwork.
Where is the First Homes scheme available?
At present, First Homes is only available to eligible buyers in England.
Are there any restrictions on a First Homes property?
The scheme is intended to help first-time buyers afford their own home and your First Home must be your only or main residential property for the duration of your First Home ownership.
The only other restriction comes when you plan to sell. You can only sell the property to an eligible First Homes buyer at the same level of discount you originally benefited from – i.e if you saved 30% on the asking price you must also take 30% off the asking price when you sell.
Just as when you purchased originally, the property will be valued by an independent surveyor. The discount will then be applied to whatever the current market value of the property is according to the surveyor’s estimation.
Your home may be repossessed if you do not keep up repayments on your mortgage.