First Homes scheme

What is the First Homes scheme?

The First Homes scheme launched in June 2021, and offers first-time buyers a discount when they purchase a new-build home in England.

First Homes must be sold at a discount of at least 30% against their market value.

After the discount has been applied, the maximum amount First Homes can be sold for is £250,000, or £420,000 in Greater London. Local authorities can impose lower price caps if they wish.

Not all new-build properties are available under the scheme, but the government says First Homes must account for at least 25% of affordable housing sold by developers.

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Who can use the First Homes scheme?

The First Homes scheme is available exclusively to first-time buyers in England, aged 18 or over.

To qualify for the scheme, you'll need to have had a household income of £80,000 or less (£90,000 or less in Greater London) in the tax year before purchasing the property.

You'll also need to take out a mortgage of at least 50% of the purchase price of the property.

• Find out more: how much mortgage can you borrow?

Will local people get priority?

This isn't a standard rule of the scheme, but local authorities can choose to add their own requirements - such as applicants having a local address or being key workers - for the first three months that properties are on sale.

If the homes remain unsold after this time, these conditions will be removed meaning any eligible first-time buyers can apply.

If you're a member of the armed forces, or their partner or spouse, you're exempt from the council conditions of being an essential working or having to live in the local area.

How do I apply for the scheme?

There isn't a dedicated website or portal where you can apply for a First Home.

Instead, you'll need to do your own research and find out which developers are taking part.

Once you find a development offering discounted homes under the scheme, you can reserve one by applying directly to the developer. They should help you to complete the application, and then send it to the local council.

You'll have to pay a fee if the First Home you're applying for is a new build, which is set by the developer. However, you'll get this fee back if your application is unsuccessful.

Could I get a bigger discount?

First Homes must be sold at a discount of at least 30% of their market value, but there is scope for some people to save even more.

Local authorities have been given the power to apply for bigger discounts of 40% or 50% on properties in their area, if they can demonstrate a need to do so to the government.

What happens if I sell a First Home?

When you buy a property under the scheme, a restriction will be added to its Land Registry entry, which will ensure the property remains part of the scheme even when it is resold.

Ultimately, this means anyone reselling a First Home will need to sell to another first-time buyer who also qualifies for the scheme.

You'll need to resell the property with the same percentage discount you bought it for. So, if you bought your home with a 30% discount, you'll need to sell it for 30% less than the market value when you come to list it for sale.

• Find out more: how to sell your house

Alternatives to the First Homes scheme

The First Homes scheme is one of a few options available to first-time buyers looking to get on to the property ladder.

• The 95% mortgage guarantee scheme allows first-time buyers to get a low-deposit mortgage. Getting a standard mortgage with a 5% deposit means you won't be limited to buying a new-build property, but can instead look at the whole market.
• A shared ownership scheme could offer you a route on to the ladder in an expensive area such as London. These schemes involve purchasing a stake of as little as 25% of a property and paying rent on the remainder. A word of warning, though - the overall monthly costs of shared ownership schemes can be high.