First Homes Scheme
The government's First Homes Scheme is a new initiative designed to help first-time buyers in England purchase a property at a discount.
But unlike other schemes, the discount stays with the home forever, helping both you and future buyers. The scheme is not available in Wales, Scotland, or Northern Ireland.
To use the scheme, you must meet several criteria, including household income caps, mortgage requirements, and potentially local council rules.
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 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.
What makes it unique?
- The discount is permanent. It's a legal covenant attached to the property's title at HM Land Registry.
- This ensures the home remains affordable for generations to come, as every time the property is sold, the same percentage discount is applied to the new market value.
- The person who buys the home from you must also be an eligible first-time buyer.
The discount is applied to the full market value of the property, not the purchase price. The property's price after the discount is applied cannot exceed £250,000 nationally or £420,000 in London.
A simple 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.
- Every stage is explained in your language. No nonsense.
- We hold your hand from start to finish.
- Fixed Fee Conveyancing quotes.
- No Sale No Fee protections (except Auction and Right to Buy).
- Fast completions for new builds.
Who is eligible for the First Homes Scheme?
To be eligible for the First Homes scheme, you must meet national criteria. It's also worth noting that local authorities can set their own additional rules, so you should always check with the local council or developer.
- You must be a first-time buyer. This applies to everyone buying the home.
- Your total household income must not exceed £80,000 per year, or £90,000 if you're buying in London. This is based on your income in the tax year immediately before your purchase.
- You must use a mortgage to fund at least 50% of the discounted purchase price.
- You must be over 18 years old.
- You must live in the property as your only or main residence.
Local criteria and priority
- Key workers, such as NHS staff, teachers, police, and armed forces personnel.
- People who already live or work in the local area.
- Individuals with a proven family connection to the area.
Is the First Homes Scheme worth it?
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.
Pros of the First Homes scheme
- The Discount: The biggest benefit is the discount of at least 30%, which can make a new home affordable when it would otherwise be out of reach.
- Reduced Deposit and Mortgage: Because the purchase price is discounted, you'll need a smaller deposit and a smaller mortgage, making it easier to get approval.
- Outright Ownership: Unlike Shared Ownership, you will own 100% of the property from day one. There is no rent to pay on any portion of the home.
- Helps the Community: The permanent discount ensures the home remains affordable for future generations of first-time buyers in your area.
Cons of the First Homes scheme
- Limited Properties: The scheme is currently only available on selected new-build developments, which limits your choice of location and property type.
- Resale Restrictions: When you sell, you must sell to an eligible first-time buyer and apply the same discount you received. This may limit your pool of potential buyers and means you will not benefit from the full capital appreciation of the property's value.
- Strict Eligibility: The income caps and local criteria are strict. You must be able to meet all of them to qualify.
- Expert panel of conveyancing solicitors with local knowledge.
- Your transaction is protected by our No Sale, No Fee policy. Terms apply.
- Fixed fee conveyancing.
- We are on 99% of mortgage lender panels.
- We can solve any property challenge.
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 | New Build Boost | Shared Ownership | Help to Buy |
|---|---|---|---|---|
Feature Availability | First Homes New-build homes in England. | New Build Boost New-build homes in England from specific builders (Persimmon, Charles Church). | Shared Ownership New-build and existing homes from housing associations across the UK. | Help to Buy Closed to new applications in England. The scheme still exists in Wales. |
Feature Ownership | First Homes You own 100% of the property from day one. | New Build Boost You own 100% of the property from day one. | Shared Ownership You buy a share (10%-75%) and pay rent on the rest. | Help to Buy You own 100% of the property from day one. |
Feature Financial Help | First Homes A discount of at least 30% on the purchase price. | New Build Boost A 15% interest-free equity loan to boost your deposit. | Shared Ownership A reduced deposit and mortgage because you only buy a share. | Help to Buy An equity loan of up to 20% (40% in London), interest-free for the first 5 years. |
Feature Resale | First Homes You must sell the home with the same discount to another eligible first-time buyer. | New Build Boost The equity loan must be repaid. After 5 years, its value can fluctuate with the property's market value. | Shared Ownership You can sell your share or buy more shares (staircasing) to own 100% and then sell on the open market. | Help to Buy You must repay the equity loan based on the property's market value at the time of sale. |
Summary: The First Homes scheme is ideal if you are eligible for the discount and intend to live in the home for the long term. Shared Ownership is a better option if you want a lower upfront cost and the flexibility to increase your ownership over time. The New Build Boost is a private scheme that can help you with a small deposit to buy a new-build from a specific developer.
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