The Ministry of Housing, Communities & Local Government has published a summary of responses to its consultation on the delivery of the proposed First Homes Scheme. The consultation received nearly 800 responses, the vast majority in support of the scheme.
The scheme was promised in the government’s 2019 manifesto and proposes to provide discounts of at least 30% of the market price on new build properties to local people buying in their area. It will also be open to certain key workers and members of the Armed Forces.
First Homes was introduced just before the pandemic, in February 2020, and a pilot scheme of 1,500 homes is included in the government’s Affordable Homes Programme. It will begin as the Help to Buy equity loan scheme is due to finish on 31st March 2021, with the deadline recently extended for Help to Buy homes to be built by 28th February 2021.
A minimum of one in four of all affordable homes built through developer contributions under section 106 should be available as First Homes.
A regional price cap will be set at £250,000 in England and £420,000 in London, and income caps set at £80,000 and £90,000 per annum respectively. The average first time buyer should be able to save around £100,000 on their new build first home and a restrictive covenant will ensure the discount is passed on to subsequent buyers of the property in perpetuity.
Local Authorities will be given the flexibility to manipulate the scheme so that those they deem to be ‘most in need’ of help will benefit. Amongst their powers, will be the ability to require higher minimum discounts of 40-50% and adjust income caps to reflect local market conditions.
Once a property becomes available for sale through the First Homes Scheme, it will be restricted to people with specific local connections for a minimum period of three months. After this time, first time buyers and other eligible groups from other areas will be able to access the property – even if they are not local to the area.
While the property can only be purchased under the scheme if the purchaser intends to use it as their sole residence, in some circumstances they will be able to let the property at market rent for up to two years. Redeployment, escaping domestic abuse and redundancy are among the likely acceptable reasons for letting the property.
The government also intends to publish a list of ‘circumstances under which non-first time buyers should be eligible for First Homes’.
As yet, there are no dates for the scheme to begin, but plans are expected to be announced ‘soon’.