An Expert Guide: First Homes Scheme - All you need to know
For years, the cost of property has been climbing steadily - making it challenging for first-time homebuyers to purchase a property. Fortunately, with the introduction of the First Homes scheme, discounts on newly built homes are now available which could make homeownership much more attainable.
What is the First Home Scheme?
The government's First Homes initiative is a new scheme that will give first-time buyers in England the opportunity to purchase discounted homes. This scheme allows purchasers of new-build properties to receive a 30% discount on the market price - for an average-sized home, this could be up to £100,000.
How does the First Home scheme work?
The First Homes scheme involves the construction of brand-new homes that are priced at a discounted rate, yet feature all the same features as their full-price counterparts. These houses will be put on the market with a discount of 30%.
In areas where the cost of property is especially high, councils can increase this discount to 50%, making it easier than ever before for first-time buyers to purchase their own homes. If buying as a couple, neither partner can have previously owned a home. Otherwise, the properties are bought and sold in the normal way.
If the first-time buyer opts to sell their property, an independent valuation will take place and the scheme discount will be applied for subsequent buyers.
Who is eligible for the First Home scheme?
To qualify for this program, you must be purchasing your property in your local area and plan on living there, not as a buy-to-let or holiday home.
All individuals are welcome to take part in the scheme; however, priority will be given to serving members and veterans of the armed forces as well as key workers such as nurses, police officers, firefighters and teachers.
To ensure the plan aids those most in need, the government has also put forth certain price caps - these include:
Caps on property prices
Properties purchased under this scheme will be capped at £250,000 after discounts are applied. In London however, a higher cap of £420,000 will be applicable.
Caps on household income
For buyers in England, the collective income limit is £80,000; meanwhile, those living in London are capped at £90,000. For the first three months of sale, local planning authorities can set a lower value.
How to apply for the First Home scheme?
To apply for the First Homes scheme, here's a brief breakdown of what you'll need to do:
Get a mortgage in principle
You’ll need this to reserve a property. Speak to one of our mortgage advisers who can access the whole market for you by searching through 1,000s of products from over 95 lenders.
Pay the reservation fee
When you find the perfect home, make sure to reserve it. The local authority will then process your application. Don't worry - if you don't qualify for the scheme, you will receive a refund.
Apply through your developer
They will guide you through the entire process to ensure that your application is submitted correctly, or even do it for you. To prove that you are a first-time buyer, a solicitor can perform land registry searches on your behalf.
Get your Authority to Proceed
If accepted, the local authority will send you an Authority to Proceed and Eligibility Certificate. It is essential that these documents be submitted to your conveyancer, mortgage provider or broker in order for them to continue with the subsequent steps of the purchase.
How can I prepare to take advantage of this scheme?
If First Homes aren't currently accessible in your region, it's worth getting ready for when they become available. Take the time to research new builds and their current prices in your area - then gauge what they will amount to with the discount applied.
Would I pay stamp duty on the full price or the discounted price?
First-time buyers are already exempt from stamp duty if their purchase is £300,000 or less. Because of the price cap of £250,000 under this scheme, it’s unlikely you’ll need to pay any stamp duty.
