First Homes scheme, a new project proposed by the government would see tens of thousands of new homes to be sold to local key workers and first-time buyers at a significant discount.
According to the government, the First Homes scheme will reduce the cost of some new-build homes by 30%. Originally proposed in the Conservative Party manifesto, the scheme would give first-time buyers the chance to buy a property in their local area at a price almost £100,000 below market value.
Organizations in the housing sector however were not warm to the idea of the scheme. Consultations into the plans were launched by the government and will run until the 3rd of April.
First Homes is to oversee the building of the new homes. Veterans and key workers like nurses, police officers, firefighters, and so on, will be given priority. Housing secretary Robert Jenrick MP described the scheme to be ‘life-changing for people all over the country looking to buy their first home’.
Purpose-built flats and houses on developments across the country, First Homes will be offered at a 30% discount to local people who would rather stay where they live and work, but are having difficulties buying a home based on the market prices. With this plan however, the government has yet to specify a number on how many new homes it plans to build, who will build these new homes, and where initially to build and test these new homes.
On selling the property, the house will retain its discount, meaning that if and when you sell the house you bought for 30% less, you will have the property valued independently then sell it to a first-time home buyer at 30% less. Under these circumstances, the question as to how such a scheme would allow these first-time buyers to climb the property ladder is raised.
The property sector has expressed concern over the scheme.
Housing charity Shelter says that the policy ‘simply puts at risk the social homes currently being built’ rather than pave the way for the construction of affordable homes, and accusing the government of taking action for appearances.
The National Housing Federation also sharing its views says that the scheme ‘could make it more difficult for housing associations and councils to provide homes for lower-income families’.
In 2014, then Chancellor George Osborne announced the Starter Homes Initiative which is very much like the First Homes scheme. The Initiative was to build 200,000 new houses on brownfield land, sell them to first-time buyers under 40, with at least 20% discount. Thirty local authorities signed up to initiate the project in 2017. By the following year, 2018, the government said that the land is being prepared for development and that ‘work is getting underway’. So far, construction of the 200,000 homes has yet to be seen or if the new First Homes project will replace Starter Homes or if both plans would run alongside each other.
As it is, it would take some time before news of the project’s development would come out. If you are in the market for your first home, there are other schemes which could help you buy your first home:
Help to Buy ISA - It's a tax-free savings account where for every £200 you save, the government will add an extra £50. But there's a maximum limit of £3,000 which is paid to your solicitor when you move.
* Help to Buy equity loan - The government will lend you up to 20 per cent of the home's value - or 40 per cent in London - after you've put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
* Lifetime ISA - Another government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards your first home. You can save up to £4,000 a year and the government will add 25 percent on top.
* Shared ownership - Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you're restricted to specific ones.
* "First dibs" in London - London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
* Starter Home Initiative - A government scheme that will see 200,000 new-build homes in England to be sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest here.
