If your hopes of getting a foot on the property ladder have been tied to the success (or otherwise) of your Lucky Dip lottery efforts then the government’s launch of its First Homes scheme on 4 June 2021 will be welcome news. Its aim is to help local first-time buyers and key workers by offering new build homes at a discount of 30% from the market price – this discount can be as high as 50% in some local authority areas.
So, if you’re a first-time buyer and the property market is completely new to you, what does all this mean?
Put simply, if your household income is below £80,000, or £90,000 in London, you’ve ticked a box of the criteria to qualify for the scheme. You will also need to have a minimum of a 5% deposit and be able take out a mortgage for a least 50% of the value of the property. Many major banks and building societies have committed to offering mortgages, including Chorley Building Society, Darlington Building Society, Halifax, Leeds Building Society, Mansfield Building Society, Nationwide, and Newcastle Building Society.
Price caps are another feature of the First Homes scheme which should be positively received considering the rapid increase in house prices. The caps will ensure that, after the discount has been applied, the purchaser cannot be required to pay more than £250,000, or £420,000 in London. Councils will also be able to make the case for imposing lower price caps.
The first properties to be sold under this scheme are in Bolsover, Derbyshire and further sites will be launched across the country in the coming weeks. The government anticipates 1,500 properties will be made available from autumn 2021, with at least a further 10,000 a year following thereafter.
Theoretically, First Homes are available to anyone who meets the above criteria but councils have the power to add further application requirements during the initial three months that a home is up for sale – for example, by limiting availability of property to key workers or local people only.
Delivery of the scheme is part of the government’s wider pledge to build one million affordable homes before the next election and to help home ownership become a realistic goal for more people across the country.
The discounts are also passed on when the property is next sold, so homes will always be transferred at a price below the market value. This ensures you’re continuing to help the next buyers onto the property ladder, provided that they also meet the criteria.
But before you begin planning the colour scheme for your dream living room, what do you need to do to make this happen? Start by checking whether a house builder in your area is currently offering the scheme on the development where you want to buy. If they give the green light, you must then meet the eligibility criteria and apply through the builder to make your purchase.
Now… let’s get house hunting!
