The Government has launched a new housing scheme to help some first-time buyers by offering a discount of 30% on the price of a new home. First Homes has been designed to help consumers in England buy in their local area by reducing the amount required for the deposit.
Veterans will be given priority as part of the Armed Forces Covenant and councils will be able to apply the scheme to public sector workers such as nurses, teachers and police and prison officers. The discount will be applied on a rolling basis, so that each time a property is sold the new buyer will be able to purchase it at a discount.
The markdown will be paid for using the contributions that housing developers ordinarily provide through the planning system. The Government is confident that the First Homes scheme will not create additional building costs.
As only a proportion of new homes will benefit from the discount, the Government is already consulting on the finer details.
The Rt Hon Robert Jenrick MP, Housing Secretary, believes First Homes will be a game changer for people all over England seeking to buy their first home. Many people, he says, who wish to buy their own home in their local area have been forced out by rising prices. So the scheme will help more buyers in years to come and ensure local communities can stay together.
Average saving of almost £100,000
The average price of a newly built house in England is £314,000, according to the Government. Under the scheme, a home sold with a 30% discount would create a saving of £94,000 and reduce a deposit of 20% by more than £18,000.
To take a regional example, the average newly built home in Cornwall costs £246,000, which means a 30% discount would provide a saving of more than £73,000. Furthermore, homes in areas with severe affordability pressures would produce even greater savings with the 30% discount.
The Government’s housing commitment
The Government is already committed to delivering in excess of one million new homes over the next five years in order to make housing more affordable. This pledge could result in tens of thousands of First Homes being built as well as measures to encourage the release of more land.
Over 240,000 new homes were completed in 2018-2019, more than at any time in the last 30 years. And the latest figures show that 250,000 energy performance certificates (EPCs) were issued to new homes in 2019, the highest number ever and an indication of further progress.
Greater number of first-time buyers
There were 357,090 first-time buyers in 2019, an 11-year high and an increase of 84% since 2010. In addition, the percentage of home owners aged 25-34 has increased from 36% to 41% over the last five years.
Paula Higgins, CEO of the Homeowners Alliance, has said that first-time buyers will no doubt welcome the opportunity to buy a good quality home at a discount in their local area.
The Alliance, she added, looks forward to contributing to the consultation and working with the Government to ensure that the scheme does what it says; that it delivers high quality and affordable local homes for current and future first-time buyers.
Jackie Bennett, Director of Mortgages at UK Finance, commented that buying a home locally can be a considerable undertaking for consumers, although all too often prices are simply out of reach.
The First Homes scheme, Bennett continued, is a great initiative by the Government to remedy this problem and UK Finance looks forward to working with them to finalise the details and help house hunters become home owners in their neighbourhood.