First-time buyers set for 30% discount on new homes
Under the First Homes scheme, the government proposes for tens of thousands of new properties to be built and sold at a discount to help people onto the property ladder.
First announced as part of the Queen’s Speech in December, the scheme will see new home prices cut by a third so that local people will be able to afford to buy in their area, rather than be forced to look elsewhere due to rising prices.
Veterans will be prioritised as part of Armed Forces Covenant and councils will also be able to use the scheme for front-line workers in their area such as police, nurses, prison officers and teachers.
How will First Homes work?
The Housing Secretary Robert Jenrick announced the plans and now the government will consult on how the scheme will run.
The 30% discount would be funded by developers through the contributions they routinely provide to the planning system so that the First Homes scheme won’t result in extra building costs.
A covenant will protect the 30% discount so that the homes will remain discounted every time they’re sold in the future. The government will also look at measures to release more land for a portion of new homes to be built under the scheme.
Details so far reveal that the scheme will lower deposit and mortgage requirements for local first-time buyers in England.
The government is also consulting on a price cap on properties available through the scheme, as it has previously done for stamp duty cuts and the new Help to Buy equity loan scheme.
With the average price of a newly-built home in England standing at £314,000, a property sold with 30% off this price would deliver a £94,000 saving and enable first-time buyers to get on the ladder faster by taking more than £18,000 off a 20% deposit.
‘Turning the dial on the dream of home ownership’
Jenrick said: “First Homes will be life-changing for people all over the country looking to buy their first home.
“I know that many who are seeking to buy their own home in their local areas have been forced out due to rising prices. A proportion of new homes will be made available at a 30% market discount rate – turning the dial on the dream of home ownership.
“The discount will be passed on with the sale of the property to future first-time buyers, helping thousands more people in years to come and ensuring local communities can stick together.”
The government has committed to delivering more than one million new homes over the next five years and more than 240,000 new homes were delivered in 2018/19.
Latest figures show the number of first-time buyers reaching 357,090 – an 11-year annual high and an increase of 84% since 2010.