Insight

First Homes for key workers

Insight
Smith Love Planning Place North West

The government has launched its First Homes scheme this month with its first in development in Bolsover. First Homes is expected to deliver at least 10,000 new homes per year when introduced nationwide from Autumn. 

The scheme will allow first-time buyers to purchase a new property at a minimum discount of 30% of the market value – going up to 50% depending on eligibility. Unlike the Right to Buy scheme, when buyers eventually sell their First Home, each subsequent buyer will receive the same discount. The aim is to prevent residents from being priced out of their communities, something previous housing schemes have been unable to overcome.

Robert Jenrick, Minister for Housing, Communities and Local Government said “These homes will be locked in for perpetuity to first-time buyers and key workers from their local area – making them an asset to both their owners and the wider local community.”

Announced last year, the scheme aims to help more local first-time buyers onto the property ladder. The specific local authority may determine an applicant’s eligibility, but the scheme has been advertised as a way of providing key workers with stable housing in their local area. Details released so far about the scheme suggest that an applicant’s work will have an impact on the discount they receive. Key workers, for example, are more likely to receive the full 50% discount.

Due to the high demand for affordable housing, especially in the big cities, those eligible will need to act quickly if they want to secure their first home through this scheme. According to the government’s website, once the scheme is up and running potential buyers should check with the builders whether a development is available on the First Homes scheme. Buyers can then apply through the builders and choose from one of several national mortgage lenders that have announced their participation in the scheme.

There are a number of criteria required to be eligible to purchase a home through this scheme:

  • Firstly, it must be the purchaser’s first home. This also includes inherited or gifted homes and applies to all applicants.
  • Secondly, there is an income cap of £80,000 (£90,000 in London) total income of all applicants.
  • Thirdly, there is a cap of £250,000 (£420,000 in London) on the value of properties available in the scheme.
  • Finally, the applicants must have a “local connection” to the area. This may include working locally or growing up in the area.

Applicability is at the discretion of the local authority, as is key worker status.

The new scheme comes as part of the government’s wider Own Your Home programme, which aims to encourage homeownership through a number of different government schemes. The online tool allows potential buyers to choose which scheme is right for their circumstances. Other schemes include Help To Buy and Shared Ownership.

Developers interested in this scheme will be subject to the usual s106 agreements. Government guidance also stipulates a minimum of 25% of all affordable housing allocations will be sold under the First Homes scheme. To ensure that the discount is passed on to all future purchasers; when a First Home is sold by the developer to the first owner, a restriction is to be entered onto the title register identifying the unit as a First Home. This restriction should ensure that the title cannot be transferred to another owner unless the relevant local authority certifies to HM Land Registry that the First Homes criteria and eligibility criteria have been met, including the discounted sale price.

In order to qualify as a First Home, a property must be sold at least 30% below the open market value.  Depending on the area of the development, local planning authorities can also choose whether to increase the discount to a maximum of 50% if they can demonstrate a need for this. Local Planning Authorities will be required to undertake a housing need assessment, analysing a number of social factors and provide an evidence-based judgment.

With developers of First Homes able to obtain Community Infrastructure Levy exemption, the government seems to have tried to achieve a balance of avoiding profiteering but incentivising developers to build First Homes so it will be interesting to see how the target of 10,000 homes progresses.

The first homes will be available to buy in Bolsover in the East Midlands from June. For those keen to get on the property ladder in the North West, you should expect to be able to purchase a home through this scheme from the Autumn, when a further 1500 sites across England enter the market.

To find out more about the First Homes scheme, visit https://www.ownyourhome.gov.uk/scheme/first-homes

For planning guidance on your First Homes scheme, email deborah@smithlove.co.uk

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