Knowledge Guides

What is the First Homes Scheme?

Posted September 29, 2023
What is the First Homes Scheme?

The First Homes scheme is an initiative rolled out by the UK government designed to aid local first-time buyers in purchasing affordable homes in their area.

It offers properties at a discount of at least 30% below market value. This can benefit you by reducing the price you’ll pay as a first-time buyer, making it easier to get onto the property ladder.

For example, if a house has a market value of £300,000, under this scheme you’d only need to pay £210,000. When you sell your property in the future, you must pass on the same discount to the next eligible buyer.

Please note that Guinness Homes does not offer properties through the First Homes Scheme. We’ve provided information about this scheme so you can compare it with Shared Ownership and decide what’s right for you.

What is the eligibility criteria?

The eligibility criteria set by the UK government are as follows:

  • You should not have owned property before applying for this scheme.
  • The combined annual household income must not exceed £80,000 (£90,000 in London).
  • Requirements may vary across local authorities. Generally, there’s a preference for those already living or working in the same area where a property under the scheme is located.
  • The property you buy using this scheme must be your primary residence. It cannot be used for rental purposes or bought for someone else to live in.

Remember, these eligibility details can vary case-by-case. Always double-check via official sources when considering an application within this scheme.

Who is given priority?

The priority order for the scheme is set by each local authority.

Initial priority usually goes to:

  • First-time Buyers: The scheme mainly targets people buying a home for the first time.
  • Local Residents/Workers: Those living or working in the area where a ‘First Homes’ property is located may get initial priority.
  • Military Personnel: Current or former members of the UK armed forces might also take precedence.
  • Key Workers: Frontline workers like nurses, police officers, and teachers could be prioritised, especially in areas with high housing prices that make it hard for these groups to own homes near their work.

Each local authority has unique prioritisation policies based on its specific housing needs. Always check official sources when considering an application process.

Pros of the First Homes Scheme

While every potential homeowner has unique circumstances, here are some key benefits of this scheme:

  • You can buy at significantly discounted prices.
  • The discounts can make mortgage repayments more manageable.
  • Priority may be given to key workers like nurses and police officers if competition arises among equally eligible buyers.

However, it might not suit everyone. Personal preferences and financial situations vary by individual.

Consult a mortgage advisor or financial expert to see if it’s right for you. Despite these considerations, the ‘First Home’ scheme is designed to support first-time buyers effectively.

Cons of the First Homes Scheme

Consider these potential drawbacks of the First Homes scheme:

  • The houses in this scheme might not match your preferences. They could be in undesirable locations, lack amenities you want, or not fit your envisioned home.
  • You won’t qualify if your combined annual income exceeds £80,000 (or £90,000 in London).
  • When selling a property bought under this scheme, it must be sold at the same discount. This benefits future first-time buyers but limits your property’s value gain.
  • If multiple local buyers meet eligibility criteria for a house, the decision may come down to ‘first come first served’ or a ballot system. This can introduce uncertainty into the process.

How do I apply?

To purchase a First Home, contact the developer or estate agent (if buying from a previous First Homes buyer) and express your interest. They will guide you through the application process and submit it to the local council.

If buying a new build, you’ll need to pay a fee set by the developer. If your application is unsuccessful, this fee will be refunded.

Follow these steps:

Check Eligibility: Ensure you meet criteria such as being a first-time buyer, income limits, and local area ties.

Find a Property: Search for properties in this scheme via local estate agents or housing developers in your desired area.

Submit an Application: Once you’ve found a property, inform the responsible agents or developers of your interest and start the application process. Requirements can vary, so verify all necessary documents beforehand.

Mortgage Pre-Approval: Consider getting pre-approved for a mortgage before making an offer; it shows sellers you’re serious about purchasing.

Legal Process: Hire professional legal help (e.g., conveyancing solicitor) when finalising sale contracts.

Completion of Purchase: After exchanging contracts with agreed completion dates between buyer and seller, complete any outstanding payments and receive keys to your new home.

Remember that this process can vary depending on individual circumstances. Seek professional advice at each stage for peace of mind.