Getting onto the property ladder can be a challenge for many and in the current climate with house prices at a record high, owning your own home can feel out of reach.
The Government has put in place several incentives to help with this. But it is the First Homes Scheme, launched in June 2021, that is starting to gain momentum with new homes under construction and well-known high-street lenders now offering specific mortgage products.
But what is the First Homes scheme, who is eligible, and how does it work? We have put together an overview to help you understand more.
What is the First Homes Scheme?
The First Homes Scheme gives the opportunity for first-time buyers to purchase a new build home at a discounted price from the market value of equivalent properties. The discounts are enticing, ranging from 30% in some areas and up to 50% in others. A property needs to cost less than £250,000 after the discount has been applied.
The homes themselves are built to the same standard and specification as full-price homes and, unlike the Government’s Shared Ownership Scheme whereby you have part ownership of the property, the buyer will own the property outright. The discount will also remain on the property, meaning every time the property is sold the saving is passed onto the next owner.
Who is eligible for the First Homes Scheme?
There are certain criteria that prospective buyers must meet in order to be eligible:
- Although the First Homes Scheme is open to all professions, the Government is prioritising the purchases of key workers and those who are currently or have previously served in the armed forces under this initiative.
- The buyer must live in the property, and it must be purchased locally meaning it cannot be bought as a buy to let or as a holiday home. There are exceptions to this for some key workers.
- If buying with another person then neither party can have owned a home before.
- The buyer’s household income must be less than £80,000. In London this is increased to £90,000.
- The First Home must be the only home owned by the buyer and cannot be used for additional properties.
- The buyer can only purchase a First Home with a mortgage of at least 50% of the purchase price.
- The scheme is currently only available in England.
When and where can you find a First Home?
The first announcement of a housing development under the First Homes Scheme was on 4th June 2021 in the East Midlands, but more announcements are happening. The largest allocation announced to date is by Eastleigh Borough Council in Hampshire. They will provide 201 First Homes within a much larger proposed 2,500 new homes development scheme. The allocation appears to be varied with some new housing developments having a much lower allocation and some none at all. This will likely cause a barrier for some and make competition stronger depending on where you are looking to buy.
Finding your First Home
Researching which home builders and developers are offering First Homes is a good place to start and could be essential to stay ahead of the curve with competition to purchase these properties likely to be high. It is also wise to get a mortgage offer in principle so you know how much you can borrow plus start doing your research to find a conveyancer. This will allow you to move forward more quickly. Bear in mind that not all will deal with the purchase of First Homes.
Making your application
As soon as you have found your First Home new build property, an application needs to be made to the Local Authority. The home builder will assist you with this by checking if you meet the initial criteria and guide you through submitting your application.
You cannot proceed without paying the property reservation fee to the home builder, and you must also legally prove that all purchasers on the property are first time buyers.
Getting approval
If the application is approved, the local authority will issue a First Homes Authority to Proceed and Eligibility Certificate. From there you need to formally apply for your mortgage and instruct a conveyancer. Once the mortgage offer is made, conveyancing completed, and the contract in place, an exchange date can be agreed and then the big move can go ahead!
Talk to Home Legal Direct:
Whether you are looking to use a government initiative such as the First Homes Scheme or another way to purchase your property, Home Legal Direct are here to offer advice and provide you with a competitive conveyancing quote to help get you moving. Get in touch with a member of the Home Legal Direct conveyancing team for further advice.