The government has announced the trial of a new first-time buyer initiative called First Homes, where the new property will be available to purchase at a discount of up to 50%.
First Homes is a part of the government’s affordable homes pledge and will be rolled out in England from the 28th of June, after a trial taking place in Derbyshire.
What is the First Homes Scheme?
The First Home Scheme is planned to replace the existing Help to Buy scheme and will offer new build properties with a 30% to 50% discount. The Government is asking developers to ring-fence 25% of new-build properties (known as section 106) to be available to first-time buyers who cannot afford the full market price. The properties will initially be available to people who live or work in the area and are unable to rise the significant deposit to purchase the property on the open market.
The property post-discount price will be capped at £420,000 in London and £250,000 in the rest of England.
Am I eligible?
You must be a First-Time-Buyer, living or working in the local area. You will need a minimum of 5% deposit on the discounted purchase price of the property and earn less than £90,000 (in London). You will also need to afford the mortgage for 50% of the full purchase price. For example, if the property price is £400,000 and the discount is 50%, you will need a £10,000 deposit and be able to afford a mortgage of £200,000.
There is no need to apply for the scheme. Prospective buyers will have to research local new build properties and find developers who offer the properties within the scheme.
The property will always be bought (and sold) with a discount to the First-Time-Buyers. It means that if you purchase this property with a 30% discount, you will have to sell it to a new First-Time-Buyer with a 30% discount on the market price.
You can find more information on the Government website https://www.ownyourhome.gov.uk/scheme/first-homes/