The initial phase of First Home properties went on sale on today as part of an early delivery project in the East Midlands. Further sites are due to launch across the country in the coming weeks.
Who is eligible for the scheme?Under the scheme, a First Home must be discounted by at least 30% against the market value. Once this discount is applied, the property cannot be sold for more than £250,000, or £420,000 if it’s in Greater London. These caps only apply to the first sale, however, so when a property is sold, its price can be higher than these limits. The homeowner must pass on the discount they received when they come to sell. That means if they bought the property with a 30% discount, they must offer the same 30% discount off the market price when they move.
First Homes can only be sold to first time buyers who have an annual household income of £80,000 or less, or £90,000 if living in the capital. Buyers must also be using a mortgage to fund at least 50% of the property value. The property can only be sold on in future to first-time buyers who meet these eligibility criteria.
Key workers providing frontline public sector services including healthcare, education and community safety, will be given priority and local authorities can choose to set higher discounts if they want to.
The Government is keen that the scheme shouldn’t be used by investors, so owners of First Homes won’t be able to let them out to tenants, or to use them as holiday homes.
The good news for buyers hoping to take advantage of the scheme is that there is now a wider choice of mortgage options available to first time buyers. According to finance website Moneyfacts.co.uk, between March and April, the number of deals available to those with a 5% deposit to put down rose by 29, up from five to 34.
Homes purchased under the First Home scheme won’t qualify for the Government’s Help to Buy equity loan, which is designed to help those with small deposits get onto the property ladder.