First Homes scheme: what is it and how does it work?

This article will reveal everything you need to know about the First Homes scheme.

The First Homes scheme offers discounted homes to first-time buyers in England who otherwise wouldn’t be able to afford one.

First-time buyers can buy a new-build home in their local area at a discount of 30% on the market price via this scheme, which for an average new-build property, could lead to a saving of up to £100,000.

The First Homes scheme involves the building of new homes specifically to be sold at a discount, which are of a similar specification to full-price homes.

These will then be put on the market at a discount of at least 30%, but this can be increased by local councils to up to 50%, including in areas where property prices are very high.

However, these properties must be purchased by first-time buyers. If you’re buying as a couple, neither can have previously owned a home.

Otherwise, the properties are bought and sold as normal.

If a first-time buyer decides to sell the property, it will be independently valued - and the scheme discount will be re-applied to this new value for the next owner.

So, this will ensure homes are sold below market price and continue to benefit future first-time buyers.

You need to be a first-time buyer to qualify for the First Homes scheme and buy in your local area with the intention of living in the property, so it cannot be a holiday home or buy-to-let.

While the scheme is open to people in every profession, certain professions may have priority such as serving members and veterans of the armed forces, as well as nurses, police, firefighters and teachers.

To ensure the scheme helps those most in need, the government has included some price caps, which are outlined below:

The scheme requires first-time buyers to buy a property with a mortgage or home purchase plan, which covers at least half the purchase value. With a discount in place, the mortgage requirement will be lower., which covers at least half the purchase value. With a discount in place, the mortgage requirement will be lower.

However, the market for lending on discount market homes is small, partly due to the limited number of homes available.

Below is a brief overview of the steps you need to take to apply for the First Homes scheme.

If there aren’t any First Homes in your area, it could be worth preparing for when they do come to market. Look into the price of local new-builds to see how much they’re likely to cost with the discount.

Then, review your budget and see what you can afford and if you can start saving towards a deposit.

It’s also worth checking your credit score. You can also request a mortgage in principle from a mortgage lender to get a good idea of what you can borrow.

First-time buyers are exempt from stamp duty, providing their purchase is £425,000 or less.

As the price cap is up to £420,000 under this scheme, you’ll unlikely need to pay any stamp duty.

Unbiased can quickly connect you with a qualified mortgage broker who can offer advice and find the most competitive mortgage for your circumstances.