Everything You Need to Know About the First Homes Scheme
The government's First Homes Scheme is an initiative designed to help first-time buyers in England purchase a new home at a discount of 30% - and even up to 50% below market value.
This isn't a loan you have to pay back, but a direct price cut that makes your dream home achievable. Unlike other schemes, the discount stays with the home forever, helping both you and future buyers.
By slashing the purchase price, the scheme also significantly lowers your required deposit and shrinks your monthly mortgage payments and, because of this, the conveyancing process requires specialist attention.
Here, we break down how the scheme works, who can apply, and what you need to know before instructing a solicitor.
How does the First Homes Scheme work?
The First Homes scheme is a government initiative that helps first-time buyers in England get onto the property ladder by offering brand-new homes at a significant discount.
The discount is at least 30% of the market value, but it can be as high as 50% depending on the local council's decision.
- Instant Equity: You buy the home at 30% to 50% below market value.
- Lower Deposits: A lower purchase price means a much more achievable deposit.
- Reduced Monthly Costs: Your mortgage is based on the discounted price, not the full market value.
What makes it unique?
Unlike other home-buying schemes, the First Homes discount isn't a loan but a permanent reduction in the property's price. It is a legal restrictive covenant attached to the property's title at HM Land Registry.
This ensures the home remains affordable for generations, so that every time the property is sold, the same percentage discount applies to the new market value. To keep the scheme fair, any future buyer you sell to must also be an eligible first-time buyer.
Are there price caps?
To ensure the scheme supports those who need it most, the final purchase price (after the discount) cannot exceed:
- £420,000 in Greater London
- £250,000 across the rest of England
For example:
A new-build property outside of London has a market value of £300,000. With a 30% First Homes discount, the purchase price becomes £210,000. You'll need a deposit for the £210,000 price, not the original £300,000 value.
You will own the home outright, not just a share of it. The discount is handled by your conveyancing solicitor, who will work with the developer and local council to ensure all legal and financial requirements are met.
Who is eligible for the First Homes Scheme?
To ensure the scheme supports those who need it most, the government has set specific national criteria. To qualify for a First Home in 2026, you must meet the following requirements:
- First-Time buyer: You (and anyone you are buying with) must over the age of 18 and never have owned a home before, anywhere in the world.
- Sole or main residence: You must intend to live in the property as your only home; these properties cannot be used as buy-to-let investments.
- Income cap: Your total household income must not exceed £80,000 (or £90,000 in Greater London).
- Mortgage requirement: You must be able to obtain a mortgage for at least 50% of the discounted purchase price.
Local connection and key worker priority
While the rules above apply across England, local councils have the power to add their own "local connection" criteria to ensure homes go to people with ties to the community. These can include:
- Key Workers: Priority is often given to essential workers, including NHS staff, teachers, police, and firefighters.
- Local Residents: You may need to have lived or worked in the specific local authority area for a set period (usually 6 to 12 months).
- Armed Forces: Special exemptions apply to active members and veterans, who are often exempt from local residency rules.
The role of Section 106 planning obligations
You may see the term Section 106 (or S106) in your initial paperwork. This is a legally binding agreement between the property developer and the Local Planning Authority and is essentially the "engine" of the deal. It performs three critical functions that your solicitor must check:
- Secures the discount in perpetuity: Ensures the 30% to 50% discount is locked into the land's planning permission so that every future owner must also sell at a discount.
- Defines local eligibility: The S106 document contains the specific 'local connection' rules that your solicitor must confirm you meet before the council issues the Authority to Proceed (internal).
- Mortgagee protection clause: A vital clause for your lender as it protects the bank if the property is ever repossessed, ensuring they can recover their funds. Without a correctly drafted S106 agreement, many high-street lenders will refuse to provide a mortgage on a First Home property.
You must check the specific S106 for the site because councils have the power to tighten or change the national rules. For example:
Feature | National Rule | Potential S106 Local Variation |
|---|---|---|
Feature Discount | National Rule Minimum 30% discount off market value. | Potential S106 Local Variation Councils can increase this to 40% or 50% for their area. |
Feature Price Cap | National Rule Max £250,000 (or £420,000 in Greater London). | Potential S106 Local Variation Councils have the power to set a lower price cap if they choose. |
Feature Income Cap | National Rule Household income must not exceed £80,000 (£90k in London). | Potential S106 local variation Local authorities can set lower income limits for the first 3 months. |
Feature Local Connection | National Rule No mandatory local connection required by central government. | Potential S106 Local Variation Can require you to live or work in the area, or be a key worker. |
In summary, even if you meet the national First Homes criteria, the S106 is what determines if you are eligible for that specific house in that specific town.
First Homes Scheme conveyancing process step-by-step
Unlike a standard property purchase, the First Homes scheme involves specific legal "checkpoints" mandated by the local authority. As specialist conveyancers, we guide you through these additional layers to ensure your 30-50% discount is legally secured.
- Step 1: Reservation & Application – Once you find your home, you pay a reservation fee (usually capped at £500), and the developer helps you submit your eligibility application to the council.
- Step 2: Authority to Proceed (ATP) – The council reviews your application. Once approved, they issue the 'Authority to Proceed' to you (the developer) and to us (your solicitors). You should not apply for your full mortgage until this is issued.
- Step 3: Legal Investigation – Standard new-build searches and contract reviews are carried out, and it is ensured that the "First Homes" restrictive covenant is correctly drafted into the title.
- Step 4: Authority to Exchange (ATE) – A "Compliance Request" is sent to the council. They then issue an 'Authority to Exchange', confirming they are happy with the valuation and your eligibility.
- Step 5: Exchange & Completion – Once the ATE is received, contracts are exchanged, and you pay your deposit. When the house is built, the final funds are sorted, you get your keys!
Why a specialist solicitor is essential
The First Homes Scheme is not "off-the-shelf" conveyancing. It requires a solicitor who understands how to interface with local authorities and manage the specific regulatory deadlines associated with the scheme.
- Covenant expertise: Ensuring the 30-50% discount is correctly registered and legally protected for any future resale.
- Lender liaison: Coordinating with mortgage providers to ensure the offer aligns strictly with the scheme's unique legal restrictions.
- Compliance certificates: Securing the official Compliance Certificate mupon completion, which is the vital document required to prove legitimate ownership under the scheme.
Is the First Homes Scheme worth it?
Deciding whether the First Homes Scheme is the right move depends on your long-term goals. For many, the immediate financial relief outweighs the future resale restrictions, but it is important to weigh up both sides.
Benefits:
- Massive savings: You secure a brand-new home for 30% to 50% less than your neighbours paid for similar properties.
- 100% ownership: Unlike Shared Ownership, you own the property outright from day one.
- Mortgage accessibility: A lower purchase price makes it easier to pass lender affordability checks.
- No rent: There is no rent to pay on the "discounted" portion, keeping your monthly outgoings predictable.
Considerations:
- Limited choice: The scheme is only available on specific plots within selected new-build developments.
- Capped gains: When you sell, you must pass the discount on, meaning you won't pocket the full market appreciation.
- Strict resale rules: You can only sell to other eligible first-time buyers, which can narrow your pool of potential purchasers.
The First Homes scheme is a powerful tool for getting on the property ladder, but it is not without its limitations. It's a great option for some but not for everyone.
First homes vs other schemes
The First Homes scheme is just one of the ways the government helps first-time buyers. To help you decide which is best for you, here is a comparison with other common schemes like Shared Ownership and the New Build Boost scheme, and the now-closed Help to Buy Equity Loan.
Feature | First Homes | Shared Ownership | 95% Mortgage Scheme |
|---|---|---|---|
Feature Ownership | First Homes You own 100% of the property from day one. | Shared Ownership You buy a share (10%-75%) and pay rent on the rest. | 95% Mortgage You own 100% of the property from day one. |
Feature Financial Help | First Homes A direct discount of 30% to 50% off the purchase price. | Shared Ownership A smaller mortgage and deposit because you only buy a share. | 95% Mortgage Government guarantee allows for a 5% deposit on the full price. |
Feature Monthly Costs | First Homes Lower mortgage payments due to the discounted price. | Shared Ownership Mortgage payment plus monthly rent to a landlord. | 95% Mortgage Higher mortgage payments as you borrow the full market value. |
Feature Resale | First Homes Must sell with the same discount to an eligible buyer. | Shared Ownership Can sell your share or 'staircase' to 100% ownership before selling. | 95% Mortgage No restrictions; sell on the open market at full value. |
Can I combine schemes?
Yes. You can amplify your savings by combining the First Home Schemes with other government initiatives such as 95% mortgages and Lifetime ISAs.
However, you cannot combine the First Homes Scheme with Shared Ownership. This is because they are two different legal paths: with First Homes, you are the 100% owner of the property, whereas with Shared Ownership you are a part-tenant who pays monthly rent to a landlord.
Selling a First Homes property
When the time comes to move on, the process for selling a First Home is designed to ensure the property remains affordable for the next generation of buyers. While the sale follows a traditional path, there are specific steps required to maintain the scheme's integrity.
- Professional valuation: A RICS survey must be obtained. This determines the home's current 100% market value.
- Applying the discount: The property must be marketed at the same percentage discount received during the initial purchase. For example, if the home was bought at a 30% discount, it must be sold at 30% below the new RICS market value.
- Council notification: The local authority must be notified of the intent to sell. They will provide the specific eligibility criteria that the new buyer must meet.
- Marketing period: For the first 3 months, the home must be marketed to buyers who meet the local connection or key worker criteria. If no buyer is found, it can then be opened up to any eligible first-time buyer nationwide.
Find your first home with legal support
The First Homes Scheme is one of the most exciting opportunities for first-time buyers, but the legal process is time-sensitive. With specific local authority approvals and restrictive covenants to manage,at SAM Conveyancing we understand the process is essential to ensuring your purchase stays on track.
Ready to take the next step? Our team is ready to guide you through the Authority to Proceed and beyond.
Andrew Boast FMAAT is a qualified accountant, conveyancing specialist and author with over 25 years of experience in the UK property sector. Since beginning his career in 2000 within established SRA and CLC-regulated conveyancing solicitor firms, Andrew has overseen the legal journeys of more than 75,000 clients.
He is the author of the property guide 'How to Buy a House Without Killing Anyone' and a frequent contributor to mainstream UK media on legislative updates, property law, first-time buyer guides, conveyancing best practices, and stamp duty changes. Andrew specialises in resolving complex title issues, property conflict disputes, and property tax options, streamlining the enquiry process to reduce transaction times and maintaining a client-friendly focus.
Caragh Bailey is a Lead Property Content Specialist at SAM Conveyancing, having joined the firm in 2020. With a portfolio of over 150 technical conveyancing, house survey and mortgage guides, she has become a primary authority on the end-to-end sale and purchase process.
Caragh specialises in complex legal workflows, including Help to Buy redemptions, equity transfers, shared ownership structures, trust deeds for tax planning, and joint ownership disputes. Her expertise extends to leasehold reform and RICS home surveys, where she provides clear, factual guidance on independent legal advice for specialist mortgage products and intricate ownership structures.
