First Time Buyers - Discount On New Homes
published on 27/02/2020
A new scheme being proposed by the Government will allow first-time buyers to buy new-build homes with a 30% discount.
The First Homes scheme will give people in England the chance to buy a home in their local area for nearly a third less than the market price, saving them an average of nearly £100,000.
Key workers, such as nurses, police officers, firefighters, and teachers, as well as armed forces veterans, will be given priority, although the initiative will also be open to people in other professions.
Housing Secretary Robert Jenrick said: "I know that many who are seeking to buy their own home in their local areas have been forced out due to rising prices.
"A proportion of new homes will be made available at a 30% market discount rate - turning the dial on the dream of home ownership."
He added that the discount would be passed on when the property was sold in order to help future first-time buyers.
The Government is currently consulting on how the scheme will be delivered and no date for its introduction has yet been given.
Why is this happening?
The Government has made improving the UK’s housing situation a key priority, pledging to build more than one million new homes during the current parliament in a bid to improve affordability.
Who does it affect?
The First Home scheme will not only reduce the amount buyers pay for their homes, but it will also reduce the size of the deposit they need to save up and make it easier for them to meet mortgage affordability requirements.
With the average new-build home costing £314,000, first-time buyers using the scheme will save an average of £94,000, while those putting down a 20% deposit will need to save £18,000 less.
The scheme aims to help people in areas of high demand, who would be unable to afford to buy a home locally without the discount.
What’s the background?
While the exact details of how the scheme will operate are still unclear, the Government has indicated that it will impose a price cap on the properties available through First Homes to ensure the initiative helps those who would benefit most from it.
The discount will be paid for through contributions that housing developers provide through the planning system, which the Government said was an established mechanism for ensuring that new developments deliver benefits for local communities.
No details have been given on what criteria will be used to determine whether potential buyers are ‘local’ but armed forces personnel will be exempt from this requirement.