A lifeline for local first-time buyers and key workers
Introduced in 2021, First Homes is a government-backed scheme designed to help more first-time buyers onto the property ladder. Under the scheme, a first-time buyer or key worker may be able to buy a newly built home for 30% to 50% less than its market value.
Buying your new build home with the First Homes scheme means you’ll have full ownership, and the reduced rates are applicable permanently. However, this scheme is only available on selected developments in line with local planning agreements.
Understanding the mechanics of the First Homes scheme
To illustrate how the scheme works, consider a First Homes property with a market value of £200,000. If you are a local key worker, the scheme enables you to purchase it with a 30% discount of £60,000, bringing down your property purchase price to £140,000.
This significant reduction increases the burden of amassing a large deposit and lowers your mortgage repayments. However, when it’s time to sell, the 30% discount must be passed on to the next buyer from the local community who qualifies as a key worker or a first-time buyer.
Eligibility criteria for the First Homes scheme
The First Homes scheme caters exclusively to first-time buyers in England who are local residents, key workers or Armed Forces personnel. The definition of key workers encompasses a broad spectrum, including doctors, nurses, teachers, delivery drivers and supermarket staff.
In addition to current Armed Forces members, the scheme accommodates divorced, separated or widowed spouses and veterans who apply within five years of leaving the forces. Local councils have the discretion to extend the definition of a key worker to include professions deemed essential in their area.
Qualifying for the First Homes scheme
Potential buyers must satisfy several conditions to qualify for the First Homes scheme. First, they must be first-time buyers – individuals who have inherited or been gifted a home are not eligible. Second, their income should not exceed £80,000 (£90,000 in London), whether they’re purchasing alone or as a couple.
Further, the property of interest must not cost more than £250,000 (£420,000 in London). Moreover, applicants must already live or work in the area where they wish to buy or have a local connection. Key workers are given priority in this scheme.
Deposits and mortgages under the First Homes scheme
A minimum 5% deposit is typically required for first-time buyer mortgages. Hence, if your First Homes property costs £200,000, a 5% deposit would amount to £10,000.
A First Homes mortgage will be necessary to facilitate purchases under this scheme. Several national and regional lenders provide 95% mortgages on properties purchased under this scheme.
Time to make your homeownership dream a reality?
If you require further information or need assistance navigating the intricacies of the First Homes scheme, don’t hesitate to get in touch. Our team of experts is ready to guide you every step of the way to make your homeownership dream a reality. Contact our team here for any questions or enquiries.
