Earlier this month (Februrary 2020) the government released information on its proposed new First Home scheme. It aims to address affordability for first time buyers and key workers by providing new homes at a discount of at least 30%. It aims to lower deposit and mortgage requirements for local first-time buyers in England – “shaking up the housing market and making the dream of home ownership a reality”
There is a 31 page consultation document available to read / download here and also a one page quick guide to read here for full information on the schem and how it aims to work. See a quick summary below.
It is important to note however this is only a consultation idea at the moment which doesn't close until April 3 2020.
How will it work?
- First Homes will be sold with a minimum discount of 30 per cent off the market price, but local areas will be able to set a larger discount to ensure the homes are affordable to local people.
- Buyers will purchase First Homes in the usual way and will have access to conventional mortgage products.
- When owners of First Homes decide to move up the ladder, their home will be independently valued. When they sell the home, the discount will be passed on to the new owner with the discount (of at least 30%) applied to the new value.
- This means homes will always be sold below market price and local communities will benefit for generations to come, with local authorities continuing to allocate these homes to first-time buyers and able to prioritise local workers.
- First Homes are for people to live in, so we won’t allow them to be used as holiday homes or as buy to lets. These are for local people to take their first step onto the ladder.
However research by the Housing Charity Shelter has found that in almost all parts of England, someone on an average salary or lower could not afford to buy one of these new-build homes. Research also shows that almost 63% of private renters in England have no deposit. New-build properties in England cost an average £314k so a 30% discount would offer a saving of £94k but would still require a significant deposit.
Additionally - the scheme talks about prioritising key workers, so at this stage we aren't sure how much provision there would be for non key worker first time buyers.
Bristol Property Centre, 27th Feb 2020.