What is the First Homes Scheme?

First-time buyers and key workers in England could benefit from a new Government scheme called the First Homes Scheme.

Those qualifying for the scheme have the chance to buy specific new-build properties at a 30% discount of its market value. It was announced in summer last year, but qualifying homes are only just becoming available.

How the First Homes Scheme works

The scheme works by offering designated newly built properties to first-time buyers, as long as they meet certain criteria. According to the government, homebuyers could save up to £70,000 on average. In some areas, 50% discount is being offered.

The value of the property must be no higher than £250,000, or £420,000 in London. Properties that qualify are identified by the government and local authorities, so it’s not available for all new-build developments.

Who is eligible for the First Homes Scheme?

To qualify for the scheme, the buyer has to have:

• Evidence of being a first-time buyer or key worker. Some local authorities may set their own criteria so it is only available to those with local area, as the scheme is run in conjunction with councils
• A deposit of 5% of the price being paid
• A mortgage of at least 50% of the price being paid
• Household income of less than £80,000, or £90,000 in London.

The property must also be the main residence of the buyer and the discount is applied to any subsequent sale of the property.

How to apply for the scheme

Firstly, you must find out which builders and developments are offering the First Homes Scheme. You will then need to contact the builder directly to check whether you meet the local and national criteria of the scheme. If eligible, the builder helps you make your application to the relevant local authority.

What about the benefits?

The First Homes Scheme means you have full ownership of the property, unlike shared ownership schemes. If you are buying a flat you will own a leasehold on your property.

What are the drawbacks?

Not all new-build developments qualify, so you will have to do your homework. It could mean you are unable to find a property in the area you want to buy. Currently, there is only one scheme in the North East, which is at Newton Aycliffe.

New-build homes come at a premium, so it might be better to find older properties on the market in the same area as they could be better value.

You cannot use the Help to Buy equity loan with the First Homes Scheme.

What if I’m buying with my partner?

Buying a home with your partner is an exciting step. To qualify for the First Homes Scheme, you must both be first-time buyers.

To find out more about the scheme, you can visit the government’s Own Your Home website.

If you’re a first-time buyer and would like to speak to our team at The Mortgage Dog, use our contact page and we’ll quickly get in touch with you.