The new government First Homes plan goes live today, offering half-price homes to first-time buyers.
The new affordable housing scheme offers a discount of up to 50% for first-time buyers, initially launching in the East Midlands town of Bolsover before expanding across England.
Despite a fanfare around the launch, even with the substantial discount applied, many first-time buyers are still unlikely to find it affordable to buy a home under the First Homes Plan.
The housing affordability crisis is most pronounced in some parts of the country, including in London, where estate agents Savills believes 88% of first-time buyers would still find it unaffordable to purchase an average two-bed flat under the First Homes scheme.
In some parts of the South East, 68% of first-time buyers would still find buying a home unaffordable.
Under the terms of the First Homes Plan, developers must sell properties with at least a 30% discount on their market value.
The First Homes scheme discount can be increased to 50% if this receives local authority approval.
Applying a significant discount to new homes will allow first-time buyers to get on the property ladder with a smaller deposit or buy a larger home for the same money.
Welcoming the introduction of the scheme, Tim Bannister, director of property data at Rightmove, said:
“There’s likely to be a scramble for properties under this scheme as they become available.
“The scheme could help some people bring their plans forward or buy a bigger home than they were originally expecting to. Eligible buyers will need to get in quick to have the best chance of securing one.”
Read how various factors have led to a bun fight in the property market in a previous blog
Government data shows that 1,500 new properties will come onto the market under the First Homes Plan this year, with an expected 10,000 a year more in the future.
One drawback already identified with the scheme is the need to sell the property in the future with the same level of discount applied, which could make it impossible for those moving up the property ladder to afford the next property.
Only first-time buyers qualify for the scheme, and those buying as a couple will both need to be first-time buyers to qualify.
Annual household income must not exceed £80,000, or £90,000 when buying in Greater London.
Homes qualifying for the First Homes Plan can be valued at no more than £420,000 in London or £250,000 in the rest of England.
To qualify for the First Homes scheme, buyers will need to live already, work or have another connection to the local area.
Local authorities can also apply additional qualification criteria to the scheme, including a lower maximum household income.
Read here for more detailed information on the Government response to the First Homes proposals in “Changes to the current planning system”