Raising money for a deposit can be one of the biggest barriers to homeownership for many first-time buyers. At the time of writing this house prices have substantially risen partly as a result of England’s Stamp Duty Land Tax (SDLT) holiday, with the average UK house price peaking at £256,000 in March 2021.
This price rise has meant that, unless you have a substantial deposit saved, additional support to get onto the property ladder is needed more than ever before. With a few schemes already available to support ‘generation buy’ the ‘First Homes’ scheme, which launched June 2021, offers discounted houses to local people as well as key workers in England.
What is the ‘First Homes’ scheme?
This latest government-backed scheme states that it will help local first-time buyers – many of whom will be key workers including NHS staff and veterans – onto the property ladder by offering homes at a discount of at least 30% compared to the market value.
To help future proof the scheme the same percentage will then be passed on with the sale of the property to future first-time buyers. The aim here is to ensure homes will always be sold below market value if asking prices rise in the local area.
How much are properties under the scheme?
As specified by the government after the discount has been applied, the first sale must be at a price no higher than £250,000 (or £420,000 in Greater London); and the home must be sold to a person who meets the First Homes eligibility criteria.
Who is eligible to purchase a First Home?
The guidance provided by the government cites that a purchaser (or, if a joint purchase, all the purchasers) of a First Home should be a first-time buyer.
Purchasers of First Homes, whether individuals, couples or group purchasers, should have a combined annual household income not exceeding £80,000 (or £90,000 in Greater London) in the tax year immediately preceding the year of purchase.
A purchaser of a First Home should have a mortgage or home purchase plan (if required to comply with Islamic law) to fund a minimum of 50% of the discounted purchase price.
First Homes & the 95% Mortgage Guarantee Scheme
With more properties set to enter the market later this year under the scheme several lenders and building societies have also agreed to provide 95% loan-to-value mortgages for First Homes:
1. Chorley Building Society
2. Darlington Building Society
4. Leeds Building Society
5. Mansfield Building Society
6. Nationwide Building Society
7. Newcastle Building Society
The COVID-19 pandemic saw a lot of first-time buyers unable to get on to the property ladder however since the introduction of these new government schemes interest will likely be high. Therefore, if you find yourself eligible, you’ll need to act quickly to ensure you don’t miss out.
Other Government homeownership schemes:
When weighing up your options on the best route to homeownership there are several schemes available, some of which are exclusive to first-time buyers:
• 95% Mortgage Guarantee
• Help to Buy: Equity Loan
• Shared Ownership
• Help to Build
Whatever your circumstances it’s worth looking into what support suites your needs best. For further advice visit ownyourhome.gov.uk.