The government has announced its First Home scheme, a policy which plans to offer first-time buyers a 30% discount on a proportion of new build homes. The scheme will lower mortgage and deposit requirements for local first-time buyers, turning the dial on affordability.
The average price of a first-time buyer property in the UK is £285,874 (November 2019). The First Homes scheme would reduce this value to £200,112. Assuming a 20% deposit and 80% mortgage, using the First Home scheme, a deposit of £40,022 and mortgage of £160,089 would be needed. Therefore, the First Home scheme would reduce a first-time buyer deposit by £17,152 and the mortgage needed by £68,610.
The government will consult on the First Home scheme to work out how it will be delivered and measures to help release more land. Currently it is thought that discounts will be prioritised for veterans and key workers and the discount will be locked into the property to ensure more first-time buyers benefit in years to come.
The government is committed to delivering one million new homes over the next five years and the First Home scheme would ensure a proportion of these are available to first-time buyers at a discount. With Help to Buy due to end in 2023, First Homes could help plug the gap. However, there are concerns that First Homes will come at the expense of traditional affordable housing, such as affordable rent, social rent and shared ownership.