You could get £100,000 off the price of your first home - here's how the new scheme would work

Wednesday, 12th February 2020, 10:33 am
Updated Wednesday, 12th February 2020, 10:58 am

A new scheme proposed by the government could see first-time buyers benefiting from discounts of up to £100,000 on the price of their home.

The 'First Homes' scheme will be aimed at first time buyers who are struggling to afford property in their local area. Housing Secretary Robert Jenrick MP hopes to see thousands of homes sold under the scheme.

Originally proposed in the 2019 Conservative Party Manifesto, the scheme will allow first-time buyers to purchase a local property for an average reduction of £100,000 below market value.

Some housing charities have expressed concerns about the scheme.(Photo: Shutterstock)

It will see thousands of purpose-built homes erected across the country to serve these buyers, with key workers (like nurses and firefighters) given first priority.

The discount could theoretically mean a first-time buyer securing a £300,000 home for just £210,000.

Is there a catch?

Properties built under the scheme will retain the discount it was purchased with, however, meaning that buyers wanting to sell will have to sell at the same 30 per cent discount.

This requirement has raised some questions about how buyers using the scheme will fare when trying to progress up the property ladder on the open market.

New build homes will be built for the scheme (Photo: Shutterstock)

The government has said it will form a model agreement in order to encourage mortgage lenders to offer buyers loans on the discounted homes. They are also considering placing a cap on the household incomes of buyers using the scheme and will consult on using a regional or national price cap on the price of houses sold under the scheme.

Criticism

The plans have faced criticism from charities and the property sector, however, with housing charity Shelter expressing concerns that rather than creating a route to affordable homes, the scheme will simply puts the social homes currently being built at risk.

The scheme bears resemblance to then-chancellor George Osborne's 'Starter Homes Initiative' which he launched in 2014.

The scheme proposed building 200,000 homes on brownfield land and selling them to first-time buyers under 40 at a discount. At the time of writing, however, none of these homes have been built.

The government hasn't yet given an exact figure of how many homes would be built under the First Homes Scheme, nor where the scheme will be trialled.

A consultation has been launched into the plans, and will run until 3 April. Further information on the scheme is likely to emerge after this time.