New plans for First Homes Scheme
The first step of this Government to get more people on the housing ladder!
The Housing Secretary has recently announced plans to cut the costs of homes by at least 30% for first time buyers under the new proposed First Homes Scheme, thereby ensuring people have an opportunity to buy a home in their local area.
"The potential discount to be applied is expected to help first time buyers by lowering deposits and mortgage requirements."
Under this proposed new scheme, local authorities would have discretion to decide the level of discount applied to a property on a site-by-site basis (with no proposals to set a maximum level of discount), ensuring affordability for local people is at the forefront of its decision making.
Priority is to be given to serving members and recent veterans of the Armed Forces who will be deemed to have met the local eligibility criteria for any local area under any circumstances. In addition to members of the Armed Forces, it is intended that 'key workers' will also be given priority under this scheme. 'Key workers' have also been referred to in the National Planning Policy Framework as 'essential local workers' which are defined as "public sector employees who provide frontline services in areas including health, education and community safety – such as NHS staff, teachers, police, firefighters and military personnel, social care and childcare workers".
It should be noted that there are likely to be a number of restrictions on purchasers under this scheme:
- This scheme will not be available for those seeking to use it in order to subsidise the purchase of an expensive property. To prevent this, the Government is considering the introduction of a cap, either a nationally defined cap or a regionally varied price cap.
- Any property sold under this scheme will be restricted for use as an individual's 'sole or primary residence'. These properties will not be permitted for use as investment opportunities (such as buy-to-let).
- The discount obtained is retained on the property in perpetuity i.e. if a purchaser received a 30% discount from the market price at the time of the purchase, in the event they decide to sell the property it must be sold for 30% below market price and to another eligible first home buyer.
The consultation is currently ongoing and is expected to end on 3 April 2020. We will keep you posted with further updates on this scheme once the consultation has been finalised.
Click here to read the consultation in full.
If you would like to discuss any of the issues raised in this update, or if you need any advice, please contact Lucy Jones or give us a call on 0345 070 6000.
Alternatively, click here to find out what our Social Housing team can help you with.
This article was prepared by Batuhan Bikim.