First Homes Scheme

First Homes Scheme

The First Homes Scheme is a Government initiative to enable first time buyers to purchase a property at a 30% discounted price. Although announced in the Conservative Manifesto, when they outlined the proposal, it is currently in its consultation stage that will run until 3rd April.

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what is the First Homes Scheme?

In a guide issued by The Ministry of Housing Communities and Local Government, they state that “The Government is committed to making the dream of home ownership a reality for everyone and we recognise that for many this simply feels out of reach. First Homes will be life changing for people all over the country aspiring to take their first step onto the housing ladder, by providing new homes at a discount of at least 30 percent”.

  • The properties eligible for the scheme will be no different to any other property on the market but will be sold with a discount of up to 30%
  • The scheme is designed to allow local people who want to stay and live in their local community or where they work
  • It’s designed to cater for first time buyers, key workers such as teachers, nurses and those in the police force together with veterans and serving members of the armed forces
  • The discount will be passed down on for future purchases to first time buyers in an effort to maintain affordable housing

As the proposal is still in its consultation stage, the full particulars are still yet to be agreed and announced. At this time the numbers quoted have been nothing other than “tens of thousands” of new homes so it is still unclear of how many people may benefit. Other specifics such as any imposed caps in regard to maximum purchase prices or if any restrictions on income are also yet to be advised.

As with any possible new housing schemes, the First Homes Scheme is receiving mixed views as to how this will benefit the wider housing needs and it is with great anticipation that we await the results of the consultation.

Who is eligible for the First Homes Scheme?

The First Homes Scheme proposed in the Conservative manifesto is currently in its consultation stage however, within the manifesto we did discover the Government’s outline, including who it is designed for. Exact eligibility and the finer details such as any possible restrictions on the maximum purchase price or if any income criteria is being imposed will follow in due course but what we do know is as follows.

  • The scheme is designed to be prioritised for first time buyers and key workers i.e. nurses, police and teachers. Also, veterans and those currently serving in the armed forces.
  • They are being offered with the view that the properties will be aimed at those wanting to remain in their local communities where they currently live or their places of work.

Do I need a deposit on top of the discount for the First Homes Scheme?

As the First Homes Scheme is still in its consultation stage, very little if anything has been released in regard to mortgage specifics including if there will be any necessity for a deposit. The Government has advised that it will create a model agreement to encourage mortgage lenders to participate in the scheme however this still comes with no guarantee of who will get involved or what terms they will offer. As the properties are being sold at a discounted price that will then be passed on to the next buyer, it is anticipated that a personal deposit will likely still be required. How much however is still very much unknown.

Do I have to pay back the First Homes Scheme discount when I sell the property?

The First Homes Scheme, designed predominantly for first time buyers and those who fall under the key worker such as nurses, police and teachers together with veterans and current employees of the armed forces, is to enable purchasers to buy a property with up to a 30% discount applied. Although still in its consultation stage the proposal in the Conservative Manifesto did outline some detail and has advised that the property when sold will need to be independently valued and the discount passed on at this time to the subsequent purchaser.

It is likely that the scheme will not permit the discount to simply be repaid at any time, as by passing down the discount this ensures the properties are always to be sold below market value with the aim that local communities will benefit for generations to come.

The Government has outlined in their consultation document that the buyer will own 100% of the property however, consideration will need to be given to the cost of any proposed improvements. This is because the property will always be sold with the discount of the value at that time to the next buyer and as such the seller may not benefit from the full uplift of the increased value.

Mortgage rates for the First Homes Scheme

At this time, although the outline proposals have been given in the Government’s Manifesto, the First Homes Scheme is still in its consultation stage and therefore the full particulars are yet unknown including those relating mortgages.

Indeed, it is yet not known which lenders will participate in the scheme with the Government simply advising that it will create a model agreement to encourage lenders to participate and offer loans on the discounted purchases.

It is anticipated that the rates offered will be priced slightly differently to the standard mortgage rates such as is the case for the current Help to Buy: Equity Loan Scheme but still continue the trend that the bigger the deposit the applicant has to put down the lower the interest rate that the lender will offer.

mortgage lenders for the First Homes Scheme

As the full particulars of the First Homes Scheme are yet to be announced, with it still being in its consultation stage until 3rd April (year), lenders are yet to offer any suggestion of their willingness to participate and for those that do, what rates and fees etc they will be offering. As yet the Government can only advise that they will look to encourage lenders to enter this arena but until such time that the full particulars are known of exactly how the First Homes Scheme will work, lenders are likely to hold their cards tightly to their chests.

Do however watch this space and when things develop and more is known, we here at Just Mortgage Brokers will look to keep you abreast of any updated news in this area.

Mortgage advice for the First Homes Scheme

The First Homes Scheme is the next potential Government offering being proposed for the housing market. Aimed at first time buyers and key workers such as nurses, police and teachers together with veterans and current serving members of the armed forces the full particulars are yet to be announced. In turn we are yet to know which lenders are to participate in the scheme and what products they may look to offer.

Those therefore looking for specific mortgage advice for the First Homes scheme will need to wait a little longer. However, please do read our useful guide which gives you a wide range of information that we do know about the scheme itself at this current time and when more is known in respect to the lending criteria, we will be sure to let you know.

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