First-time buyers could possibly get a 30% discount when purchasing a new-build home: in the event you apply?

First-time buyers can help to save as much as 30% when purchasing a new-build home underneath the government’s First Homes scheme, which launches today.

The government says the new discount scheme will ‘provide a route for first-time buyers to stay in their local areas, rather than being forced out due to rising prices.’

Here, Which? explains how First Homes works, including details on eligibility and alternatives.

How will the First Homes scheme work?

The First Homes scheme enables first-time buyers in England to buy a new-build home for a cheap price of 30% on market value.

Once the discount continues to be considered, the utmost prices homes can be sold for is going to be limited to lb250,000, or lb420,000 working in london.

To meet the requirements, you’ll have to be a first-time buyer and also have household earnings below lb80,000, or lb90,000 if you’re in London.

Buyers need to take out a mortgage with a minimum of 50% of the property’s value. The federal government says major banks and building societies have dedicated to offering high loan-to-value mortgages on homes sold underneath the scheme.

The following lenders have registered to date: Chorley Building Society, Darlington Building Society, Halifax, Leeds Building Society, Mansfield Building Society, Nationwide and Newcastle Building Society.

Will the scheme be restricted to local buyers?

Theoretically, First Homes are available to anyone who meets the above mentioned criteria, but local councils may have the choice to prioritise specific groups of buyers.

Councils can also add additional criteria for that first 3 months a home is on sale – for instance by limiting applications to key workers or local people. If a property is still available following the three-month period, anybody who meets the scheme’s main criteria can use.

The government says the scheme will support ‘fantastic key workers wanting to get their first foot around the ladder’ and says First Homes is going to be ‘assets to both people and also the local community’.

How many First Homes will be available?

The first properties to be removed under the scheme launched today in Bolsover within the East Midlands, however it may be a while before the scheme really enters gear.

The government says further sites is going to be launched in the next few weeks. It anticipates 1,500 First Homes becoming available by the end of 2021, and a minimum of 10,000 a year thereafter.

How can one buy a home under the scheme?

There isn’t a dedicated website or portal where you can obtain a First Home, so you’ll have to do your personal research locally to find out what developers take part.

Once you find a development offering discounted homes under the scheme, you are able to reserve one by making use of straight to the developer.

Is it possible to get a bigger discount?

As standard, homes sold underneath the scheme is going to be available for 30% under market price, but there's scope for councils to provide a great deal larger discounts.

Local authorities and neighbourhood planning organisations can provide discounts of either 40% or 50% on First Homes within their area, whether they can demonstrate grounds the larger discounts are essential.

What happens basically sell an initial Home?

The government intends that homes sold under the scheme will stay part of it for the long term.

When you buy a First Home, a set limit will be added to its entry on the Land Registry. This can make sure the property remains area of the scheme even if it is resold later on.

This means you’ll have to resell a First The place to find an eligible first-time buyer, which you’ll need to market it with the same percentage discount you taken advantage of whenever you got it, regardless of whether the home has gone up or down in value.

Is the scheme a good idea for first-time buyers?

The new scheme will certainly be tempting for cash-strapped first-time buyers struggling to get on the home ladder, however it might not be right for everybody.

First of all, the speed of the roll-out means buyers could face a battle to secure a house. Around 300,000 people bought their first home in 2021 – a figure that dwarfs the ten,000 new homes apt to be available every year under the scheme.

Tim Bannister of Rightmove says: ‘There's apt to be a scramble for properties under built because they become available, especially as we've already seen an influx of first-time buyers go into the market recently.

‘Based on current available stock levels it's unlikely you will see enough of these properties to satisfy our prime amounts of demand’.

In addition, buyers while using scheme may find it difficult to progress to buying a house beyond it in the future. The discount might allow you to buy a home now, but losing 30% of the property’s value whenever you sell may leave you struggling to progress up the ladder.

Alternatives to the First Homes scheme

The First Homes scheme is one of a handful of options available to prospective first-time buyers.

• The 95% mortgage guarantee scheme allows first-time buyers to get a mortgage with a small deposit. Getting a standard mortgage with a 5% deposit means you won’t be restricted to purchasing a new-build property, but can instead look at the resale market too.
• The Help to Buy scheme offers a 20% equity loan (40% in London) from the government on new-build properties in England. It is now restricted to first-time buyers only, and regional price caps apply. Wales has its own version of Help to Buy, but Northern Ireland and Scotland don't currently offer it.
• A shared ownership scheme could provide you with a way to the ladder if you reside in an expensive area such as London. These schemes involve investing in a stake of less than 25% of the property and paying rent around the remainder. A word of warning, though – the overall monthly costs of shared ownership schemes could be high.