First Homes Scheme: Government help for first time buyers

Mon 4th Sep 2023

With the Help to Buy Equity Loan ending, the introduction of the First Homes scheme will be welcome news to first time buyers. The Government launched this scheme in 2021 with hopes to further help Generation Rent turn into Generation Buy.

Currently, the scheme is only available in England, and it will mean first time buyers may be able to buy a home for 30% to 50% less than its market value. The home can either be a new home built by a developer or a home bought from someone else who originally bought it as part of the scheme.

How does it work and who is eligible? Laura Vanstone explains.

How the First Homes scheme works

Eligible properties will be advertised as part of the scheme by developers of new homes in your area. The homes cannot cost more than £420,000 in London or £250,000 outside of London after the discount is applied. For example, if a property is on sale for £200,000, under the scheme it could be purchased from £140,000 to £100,000 depending on the percentage. Homes will be valued by an independent surveyor to ensure that the discount reflects an accurate market value.

The First Home scheme differs from the Help to Buy Equity Scheme. This is because the discount doesn’t need to be paid back nor will it gather interest. You also own 100% of the property unlike with shared ownership.

You will need a minimum 5% deposit to participate. The exact percentage will depend on which lender you go to for your mortgage.

Eligibility & exceptions

As with Help to Buy, there are certain eligibility requirements to being able to access this scheme. The basic conditions of the scheme say you must be:

  • Over 18 years old
  • A first time buyer (if you’re buying as a couple, you both need to be first time buyers)
  • Able to get a mortgage for at least half the price of the home after the discount
  • Earning a total income of no more than £80,000 (£90,000 in London) in your household

It’s also important to note that local councils can set their own eligibility conditions, so check with your local authority. This could mean that priority is given to essential workers, those from the area or on lower incomes.

You are exempt from a council’s essential worker conditions if you’re in the armed forces, a veteran, or divorced/widower from a member of the armed forces.

What happens next

To apply, you need to contact the developer and let them know you’re looking to buy a First Home. If you’re buying from a previous First Homes buyer, then contact the estate agent. Either of these parties can help you in completing an application which will then be sent to the council. You’re also required to pay a fee set by the developer if the First Home you’re trying to buy is a new-build property. This is known as a Reservation Fee.

If your application is approved by the local authority, then you can begin the home-purchasing process. It’s at this stage that you would seek out a mortgage lender who will arrange the Government assistance for the First Homes scheme. The resulting aspects of buying a house should be dealt with by a Conveyancing solicitor.

Once you have received a mortgage offer and agreed to a contract with the developer, your conveyancing solicitor will begin the process of contract exchange with the council.

Further conditions

Should you decide to move on and sell the property, certain conditions will need to be adhered to. Firstly, the buyers of the property must fit the same eligibility criteria for buying a First Home. You can sell the home based on its market value at the time of sale, however, you must give buyers the same discount percentage that you received.

This is to ensure that multiple generations of first time buyers will be able to benefit from the Government scheme.

The Government want this scheme to benefit multiple generations of first time buyers thus the deductions will continue throughout the buying and selling of the properties.

If you’re looking into letting the property, remortgaging or if your circumstances change, the Government have created a helpful guide to the First Homes scheme.

Coodes Solicitors

The First Homes scheme will assist many households in Cornwall and Devon on their way to finally becoming homeowners. Getting onto the property ladder can be an exciting milestone for first time buyers, we also understand it can be daunting. That’s why it’s so important to consult with a Conveyancing solicitor that you can trust.

Coodes are firmly rooted within the South West and have been serving the local area for over 175 years. We’re invested in the community and will continue to offer our expert, jargon-free advice to guide people into their first homes.

Get in touch with our award-winning Residential Property Team today or contact Laura Vanstone, a Licensed Conveyancer at Coodes, via email or by calling 01409 255907.

Mon 4th Sep 2023

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