Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

UK government sets out eligibility for First Homes scheme

eligible

To be eligible, borrowers should not have a combined annual income over £80,000, which is increased to £90,000 for London

The UK government has set out eligibility criteria for its ambitious First Homes scheme, which aims to provide homes for first-time buyers (FTB) at a minimum discount of 30 per cent.

According to a statement yesterday from minister of state for housing Christopher Pincher, the scheme will open from 28 June and will prioritise FTBs.

To be eligible, borrowers should not have a combined annual income over £80,000. This is increased to £90,000 for London.

Those using the First Homes scheme should also use a mortgage for at least 50 per cent of the discounted purchase value in order to deter using these homes as investments, with additional limits placed on letting out First Home properties.

First Homes must be discounted by a minimum of 30 per cent, although local authorities can deepen this minimum discount to 40 percent or 50 per cent if they can provide evidence of need.

Local authorities also have the discretion to impose further caps and criteria such as income caps, prioritising key workers or requiring a local connection based on work or living arrangement.

After the discount is applied properties should be priced at no higher that £250,000, or £420,000 in Greater London.

The scheme also requires a minimum of 25 per cent of all affordable housing units secured through developer contributions to be First Homes.

Some have noted that this could have a damaging effect on a local authority’s supply of social rented housing.

However, Pincher noted: The government recognises the importance of social rent as part of the affordable housing tenure mix. A local authority should prioritise securing their policy requirements on social rent, once they have secured the 25 per cent First Homes requirement.

Where other affordable housing units can be secured, these tenure-types should be secured in the relative proportions set out in the development plan, he added.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.