First Homes discount scheme offers new hope to first-time buyers


Homes like this one in Derbyshire will be available with at least 30% off (Picture: Keepmoat Homes)

A discount of at least 30% off the price of a new-build might leave you wondering what the catch is, but that’s exactly what’s on offer through the new First Homes scheme, which officially launched at the beginning of this month.

The latest in the government’s portfolio of affordable housing options is targeted at first-time buyers with a local connection and key workers, who can now own a home in their own community, without being priced out and moving to an unfamiliar area.

Discounts – which can be as high as 50% – apply forever, so will be passed on when you sell, keeping the homes affordable for future buyers.

Who’s eligible?

First-time buyers must currently live or work in the local authority area where they’re buying, or be key workers, a term that includes delivery drivers and supermarket employees as well as teachers and NHS staff.

Their total household income – whether individual or joint – can’t exceed £80,000, or £90,000 in London.

Prices after the discount has been applied are capped at £250,000, with the exception of the capital where the limit is £420,000.

So you’d be able to buy a property with a maximum market price of £357,000 to £500,000, depending on the discount, and valued at as much as £840,000 in London with 50% off.

Buyers must fund at least 50% of the post-discount cost via a mortgage.

Seven lenders have agreed to provide 95% loan-to-value mortgages. Halifax and six building societies, including Nationwide and Leeds, are among those supporting the scheme, with more expected to follow.

Locations

The scheme’s first homes are on sale at Keepmoat Homes’ Meadow View development in Shirebrook, Bolsover, Derbyshire.

Prices start from £110,600, based on a 30% discount on a three-bed semi-detached house with a full market value of £158,000.


Meadow View

The first homes on sale as part of the scheme are already available in Bolsover (Picture: Keepmoat Homes)

More sites are soon to be launched across England, and the government plans to release a further 1,500 homes from the autumn (though not yet in London). The aim is to deliver at least 10,000 annually.



Here’s how much the discount could save you on a three-bed Hadley semi at Meadow View

First Homes

Full market price: £170,000
Discounted price (30% off): £119,000
Deposit (5%): £8,500
Mortgage: £552.60 per month (3.49% over 25 years)

Without government support

Full market price: £170,000
Typical 15% deposit: £25,500
Monthly mortgage: £618.82

(calculations provided by censeo-financial.com, based on assumptions as lenders haven’t yet released products)

Eventually, First Homes will be offered on selected plots in most new developments, and eligible buyers can apply through the housebuilder.

Eligible buyers should act fast to avoid missing out. ‘Based on available stock levels, it’s unlikely there will be enough of these properties to satisfy the high levels of demand, so be ready to move quick,’ says Tim Bannister, Rightmove’s director of property data.

Mark Hayward, chief policy adviser at Propertymark, the professional body for estate agents, is worried about the effect on property prices.

‘In welcoming this move, we also reiterate our concern that introducing more buyers without increasing supply could further fuel the spiral in house prices,’ he says.

Find out more about the scheme here

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