The government’s First Homes policy came into effect 28 June 2021. The First Homes scheme is designed for local first-time buyers and key workers who want to stay in the communities where they live or work, but are struggling to get onto the property ladder. These homes will be sold direct by the developer and units may start to be available by 2023.
What is the First Homes Scheme?
The First Homes scheme offers eligible first-time buyers a discounted property. The maximum amount First Homes can be sold for is £250,000. This discount remains with the property so that future eligible buyers can benefit from the scheme if the house is re-sold.
Information For Developers
First Homes must account for at least 25% of affordable housing units secured through the section 106 obligations, whether on-site, through cash in-lieu or as a combination of two. First Homes must take priority over the other affordable housing products. The remaining proportion of affordable housing should then prioritise securing their policy requirements for social rented properties once they have secured the first homes requirement.
First Homes should be provided for applications that are determined after 28 Dec 2021. This deadline is extended to 28 March 2022 for sites where there has already been significant pre application discussions. The key details are developer perspective are:
- discount on market value must be a minimum of 30%, up to a maximum of 50% depending on local circumstances.
- sold to people meeting the criteria i.e. keyworkers or local residents
- title restriction on the property using the section 106 agreement to ensure that the discount is passed down when the home is sold in the future.
- post-discount price of no more than £250,000 – although local authorities can set lower caps if evidenced
See the First Homes Guidance available below for further information.
Who is eligible?
The First Homes scheme is available exclusively to local first-time buyers or key workers who meet the following three criteria:
- first-time buyers
- individual or couples with a combined income not exceeding £80,000
- purchasers with a mortgage or home purchase plan for at least 50% of the discounted purchase price
Local authorities can have their own criteria such a local connection and key workers, for the first three months that properties are on sale.
If the homes remain unsold after this, these conditions will be removed meaning any eligible first-time buyers can apply.