First Homes

Posted in September 2020

First Homes is the latest scheme announced by the government to offer 30% discount on certain new build homes to key workers and local first time buyers. 

First Homes
The Government's new affordable housing scheme has been conceived to help the heroes working on the COVID-19 Front Line buy their own home. However, in realty, it seems that it can only be afforded by approximately 10% of full-time working Londoners.

This latest government scheme has been designed to give a helping hand onto the property ladder to key workers such as fire fighters, police officers, nurses, teachers and first time buyers in their respective local areas. It is scheduled to be piloted in 2021 and will offer a 30% discount on certain new build homes that qualify and this would then be passed on to future buyers.

However, recent research indicates that any prospective purchasers wishing to use the First Homes scheme to buy a home at the current London average house price of £479,000, would need a salary of £71,000 pa even after the 30% market discount. This calculation also includes a 5% deposit and is based on an average mortgage borrowed at 4.5 times the annual salary.
In contrast, approximately 14% of London’s full-time employees could afford to buy an average priced London home if they used Help to Buy, which in theory would mean an additional 85,000 potential individual buyers.
This trial of 1,500 homes was announced recently as part of a £12 Billion post-pandemic affordable homes packages. It is widely considered to be the replacement scheme when Help to Buy ends in March 2023.

A spokesman for the Housing Ministry said “We recognise the significant contribution made by key workers during the coronavirus pandemic. The Government’s First Homes scheme will cut the costs of some new homes by a third for first-time buyers, with councils able to prioritise frontline workers.”

Whilst the new First Homes scheme does offer the government backed discount home ownership incentive, whereby the discount remains in perpetuity, only time will tell whether it will have the same outreach as Help to Buy.

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