Government launches new First Homes scheme for first-time buyers

The scheme will allow local first-time buyers to buy homes at at least a 30% discount locked into the home in perpetuity.
A person holding a set of house keys.

The government has launched its new flagship First Homes scheme which will make homes available at a discount for first-time buyers.

The First Homes scheme will allow local first-time buyers, including key workers and veterans, to buy homes at a discount of at least 30% compared to the house’s market price.

The discount will be passed on to future first-time buyers with the sale of the property, meaning the homes will always be sold below market value.

The scheme aims to help local people who struggle to afford homes at market prices in their area but do not want to move elsewhere.

The housing secretary Robert Jenrick MP said: “Enabling more people to buy their own homes is at the heart of the mission of this government, and First Homes will offer a realistic and affordable route into home ownership for even more people who want to own their own home.

“Thanks to First Homes, we will offer more homes to local people and families, providing a route for first-time buyers to stay in their local areas rather than being forced out due to rising prices.

“First Homes will also support our fantastic key workers who are looking to get their first foot on the housing ladder – from front-line doctors and nurses to delivery drivers and supermarket staff – by giving many of them the chance to buy a home at a 30% discount.

“These homes will be locked in for perpetuity to first-time buyers and key workers from their local area – making them an asset to both their owners and the wider local community.”

The First Homes scheme joins other government schemes aimed at aspiring homeowners such as Help to Buy, shared ownership, Right to Buy, and the 95% mortgage guarantee scheme which was launched earlier this year.

The first First Homes properties have been put on the market today as part of an early delivery project in Bolsover, East Midlands, with further sites set to launch across the country this summer.

Councils will be able to set a local connection test to determine who should be prioritised for the scheme based on housing need.

A further 1,500 First Homes will enter the market this autumn. The government plans to deliver at least 10,000 such homes a year in the years ahead, and perhaps more if the scheme is successful.

High-street lenders, along with local building societies and community lenders, have pledged to offer 95% loan-to-value mortgages against First Homes to support the scheme’s rollout.

The launch of the scheme follows concern from local leaders that it risks limiting councils’ abilities to build affordable homes, due to plans to fund the scheme through section 106 contributions.

David Postings, CEO of UK Finance, said: “Key workers have kept the country running during the pandemic and we are committed to doing what we can to help them, and other local first-time buyers across England, to realise their dreams of owning their own homes.

“Our commitment is shared across all necessary stakeholders, as underscored by the high level of co-operation between lenders, government, local authorities and developers in helping drive the First Homes scheme forward.”

The government has announced a further £40 million funding package today to help local councils build more homes in their communities.

This includes £20 million of capital funding for the 70 successful bids for the Land Release Fund and £10 million of resource funding from the One Public Estate programme, the partnership between MHCLG, the Cabinet Office and the Local Government Association.

The package also includes £2.8 million for local authorities to develop proposals for the New Development Corporation Competition, and £9.1 million to support its Garden Communities Programme. The Garden Communities Programme aims to deliver over 350,000 new homes by 2050.

Image credit: Pixabay

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