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First Homes scheme: What it will look like

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06/08/2020
10 things we've learnt about the Government's new affordable housing scheme, which offers first-time buyers a 30% discount on a home
First Homes scheme: What it will look like

The Ministry of Housing, Communities and Local Government has published further details on the government’s new First Homes scheme.

It aims to help first-time buyers purchase a home in their local area for a 30% discount on the open market price.

According to Government figures, this will save first-time buyers around £100,000 on the price of an average newly built property in England.

What you need to know

  1. In order to qualify as a First Home, properties must be marketed and sold at a discount of at least 30% below market value.
  2. In some parts of the country where property prices are very high, a higher minimum discount of either 40% or 50% on First Homes built in their local area can be arranged, if the Local Planning Authority can evidence the need for affordable homes.
  3. The 30% discount will apply in perpetuity, which means that future buyers of the property will be able to benefit. Every time a First Home is resold, the discount will be passed on to the next generation of homeowners.
  4. For the first three months, First Homes must be exclusively for buyers with local connections. After three months, the property will become available to all first-time buyers across England at a 30% discount.
  5. First Homes will be subject to price caps, so the most expensive properties are not eligible. These will be set at £250,000 across England and £420,000 in London.
  6. A First Home must be the buyer’s sole and primary residence. However, in response to unexpected life events, they can let out the property for up to two years.
  7. Buyers using the scheme will be subject to household income caps of £80,000 across England and £90,000 in London. Local Planning Authorities will be able to set lower income caps for the first three months of sale.
  8. First Homes should only be sold to first-time buyers. But, in some circusmtances, non-first-time buyers will be able to purchase them – for example key workers stepping up to their second property.
  9. First Homes should only be purchased using mortgage finance or a home purchase plan which covers at least 50% of the purchase value. In other words, you can’t get one if you have a deposit of more than 50% because that means you probably don’t need the scheme.
  10. A pilot scheme will initially deliver 1,500 First Homes through the Affordable Homes Programme.

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