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TODAY'S OTHER NEWS

Confirmed: 30% discount for first time buyers under new scheme

Housing Secretary Robert Jenrick has confirmed that the First Homes scheme will provide newly built homes at a 30 per cent discount for first time buyers, local people and key workers.

Confirmation of the initiative, first announced back in February, came in the lengthy and controversial planning reform proposals outlined by Jenrick this week.

“First Homes will be life-changing for people all over the country aspiring to take their first step on to the housing ladder” he says, adding that the discount should be “at least” 30 per cent.

The discount will be ‘attached’ to the specific properties in perpetuity, ensuring future buyers can continue to benefit from it.

“When owners of First Homes decide to move up the housing ladder, their home will be independently valued, When they sell the home, the discount will be passed on to the new buyer with the discount (of at least 30 per cent) attached to the new value” says a guide to the scheme issued by the Ministry of Housing, Communities and Local Government.

It continues: “First Homes are for people to live in so we won’t allow them to be used as holiday homes or as buy to lets. These are for local people to take their first step on to the ladder.”

The ministry says that slashing the cost of the necessary deposit – an example given concerns a £246,000 property having more than £18,000 cut from a 20 per cent deposit – will mean young people will not be forced to move away from their home towns when searching for an affordable property.

Armed forces veterans will be given priority under the scheme, and councils will be encouraged to allow front-line workers, such as teachers, nurses, prison officers and police, to be prioritised too.

The government says that the scheme will be funded through contributions that housing developers routinely provide through the planning system, which means that there will be no extra building costs.

However, there’s still no specific timescale to the arrival of the initial First Homes with the MHCLG saying more information should be available “later this year.”

  • icon

    I have three of these for sale. Lenders don’t like it... we have had 4 fall through as mortgage companies will not lend on them. Great idea but Jenrick needs to lean on lenders to make them understand.

    Algarve  Investor

    I thought the scheme wasn't in place yet?

     
    Matthew Payne

    It was discreetly rolled out yesterday, albeit there was no announcement as such, I just came across it. I am not surprised lenders wont touch it especially at the moment, but I cant see that changing much. The scheme is excessively complicated with regional price caps after 30% discounts, independent pricing sign off, salary caps to qualify, covenants on titles etc. Wouldnt be surprised to see this canned in the not too distant future. Stick to help to buy or a variation of it.

     
  • Andrew Stanton CEO Proptech-PR    Proptech Real Estate Influencer

    It already exists, at least on a 10% discount in perpetuity basis, for key workers or local working people. No problems with lenders, a person I know bought one a few years ago, when they move they keep 90% of the equity (less any mortgage burden of course if outstanding) and the new buyer pays 90% of the going selling price. In a way you get 10% more house for your money, a bit of a win win.

    But, in the pandemic world, the chancellor having put the housing market on steroids, it could be argued that a 90% or 70% price tag on a new home that has ramped up in value by 10% due the stamp duty stampede sort of cancels gains out.

    So if £250,000 was new home price pre-Covid-19, and you buy 70% = £175,000 to finance, price inflation due to stamp duty holiday means buy same new home at £275,000, and that 70% = £192,500, extra £17,500. Maybe I should go into politics either housing secretary or chancellor, both need to get out of that Westminster bubble and join the real world.

    Then again I do not suppose that all of those in parliament, both houses, have to worry about their housing needs, given the scandals over moat clearance and bird baths that came out a few years ago, when the great and the good were ... being economical with the truth regarding what they claimed. And flipping which was the main and secondary residence depending on the tax efficiency.

  • Angelo  Piccirillo CEO AVRillo

    It's sad, and a missed opportunity.

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