What is the First Homes Scheme?

For many people, the thought of owning a home in their community will seem like a distant dream. Unless you come from a wealthy background, have been gifted a significant amount of money or have a large amount of savings, then the average income often can’t support a first-time buyer mortgage.

That’s where the First Homes Scheme comes in.

Introduction to The First Home Scheme

Put simply, The First Homes Scheme is a way of helping first-time buyers, many of whom will be key workers such as NHS staff and teachers, to get onto the property ladder for the first time.

The scheme currently only applies to those looking to buy their first home in England, however there are other schemes being offers by The Welsh Govenrment in Wales.

Eligible homes can be built by a developer or can be bought through an estate agent providing the house was previously bought by someone on the scheme.

The scheme is there to support local people who may be struggling to meet the market value of houses in their area. The amount of people who cannot afford to buy their first home has increased largely due to how fast house prices have increased relative to earnings.

Buying your first home is getting harder. The First Home Scheme is designed to change that.

It’s never been harder to get on the property ladder

In fact, the price of the average UK home has increased almost twice as much as the wages of the average UK worker over the past 50 years. This widening gap between household income and UK home prices has limited the amount of young people able to buy their first home.

The First Home Scheme offers a way of making buying a home more affordable, as well as keeping those all-important key workers in their respective communities where they may have a family and an occupation that is hard to relocate.

How Does the First Homes Scheme Work?

The scheme works by offering homes to key workers looking to buy property at a discount of at least 30%. That same percentage will continue on with the sale of the property to future first-time buyers, ensuring the homes are always sold below market value.

Councils will be allowed to give first dibs to key workers living in the area looking to get on the property ladder. It’s an incentive for keeping the people who have worked exceptionally hard during 2019 to 2021, in the area so they can continue their often life-saving work.

Homes are allocated by local councils.

How are discounted homes allocated?

Allocation of discounted homes is carried out by each local authority setting a local connection test to determine which key workers should get priority based on the needs of the community they operate within.

Some councils may prioritise the scheme for:

• Key workers, as defined by the specific council
• People who already live in the council area
• People on lower incomes

Am I eligible for the First Home Scheme?

To be eligible for the First Home Scheme you must:

• Be at least 18 years old
• Be a first-time buyer
• Be able to get a mortgage for at least half the price of the home
• Earn no more than £80,000 (£90,000 in London) before tax

If you’re still unsure as to whether you are eligible for the First Home Scheme, it could be worth getting in touch with a property finance broker for guidance.

Where Are the First Home Scheme Properties Situated?

The scheme launched during June 2021, with the first phase of homes based in the Bolsover district of the East Midlands. Following on from the launch, a further 1,500 homes entered the market from Autumn 2021.

Now that the project is fully up and running, the government projects at least 10,000 homes a year entering the scheme across England.

There are a number of banks and building societies that have joined the scheme.

First Home Scheme banks and building societies

Many banks and building societies have announced their partnership with the scheme, committing to provide 95% LTV (Loan to Value) mortgages for first homes. These include:

• Chorley Building Society
• Darlington Building Society
• Halifax
• Leeds Building Society
• Mansfield Building Society
• Nationwide Building Society
• Newcastle Building Society

How Can Pure Property Finance Help with the First Homes Scheme?

If you’re lucky enough to be in a position to secure a first-time buyer mortgage, then our experienced and professional team at Pure Property Finance are here to help find you a deal. Our dedicated team of first-home specialists can help pave the way to homeownership for you, whether this involves the First Home Scheme or not.

Want to learn more about our services? Contact us today.