From next month, new flats and houses in England built under the First Home scheme can be bought by first-time buyers for at least 30 per cent less than market value, and potentially up to 50 per cent off in some cases.
First Homes criteria
Eligibility will be managed at the discretion of the local authority, and the homes are for first-time buyers whose household income does not exceed £80,000 (£90,000 in Greater London).
The homes will be available at a discount decided by the local authority. After the discount has been applied, the first sale must be marketed at £250,000 or less (or £420,000 in Greater London).
Purchasers who can afford to buy one of the homes without a mortgage will not qualify for the support.
Primary residence and renting
First Homes are intended to be used as a person’s sole or primary residence but where necessary, and as long as the relevant local authority is notified, First Homes owners can rent out their home for a maximum period of two years.
First Homes is a creative initiative and one that can really work because you are not just introducing more buyers, you are also giving them a home to buy. That is key because we have a very busy market right now, full of hungry buyers, and there is a danger that introducing more buyers without increasing supply could further push the supply and demand out of balance, meaning house prices would continue to rise.
It’s clear that the UK Government recognise the importance of homeownership, looking forward we want to see a further expansion of measures to support the market as a whole. Coupled with planning reforms to make building easier and create more homes, the UK Government should now look to incorporate initiatives to encourage and support older generations to downsize and release family homes.
Buying and selling First Homes
When sold, the discount exists in perpetuity, meaning the properties will enable a foot onto the ladder for multiple first-time buyers as the properties change hands.
What does this mean?
Properties bought under the scheme will have to be sold to first-time buyers who are also eligible for the help. As a result, the property will need to be sold with the same discount it was purchased. For instance, a property bought with 30 per cent off market value, will need to be sold for 30 per cent off what it is now worth.
Changes to planning policy
Under the plans, a minimum of 25 per cent of all affordable housing units secured through developer contributions should be First Homes as part of a new national threshold in England. Local plans and neighbourhood plans should take into account the new First Homes requirements from 28 June 2021.
