For those not yet on the property ladder in England, the climb to the first rung has become substantially steeper in recent months.

Spiralling inflation, hikes in energy bills and higher prices at the pumps and supermarket tills have made saving for a home of your own a huge ask. 

Thankfully, at a time when discounts and good deals are difficult to come by, there are two avenues of Government assistance that first-time buyers can explore in a bid to ease their escape from rental accommodation or living with family.

Prospective purchasers in need of a leg up can choose between the First Homes scheme, which was launched last year, and the long established – but soon to disappear – Help to Buy equity loan.

Both initiatives deliver on their aims of making property ownership more accessible, but which is the best option will depend on your personal circumstances.

In terms of providing financial help in the here and now, the First Home scheme is certainly a cracker. Those eligible will benefit from having 30 to 50% of the market value taken off the price of their chosen property and, in turn, will not need to borrow or put down as much money. 

However, the fiscal advantages come with several constraining factors – chiefly the scheme limits your options on where you can buy (the property must be in your local area and not worth more than £250,000 – or £420,000 in London – after the discount has been applied) and who you can later sell to. The “saving” you enjoy at the time of purchase is passed on should you opt to move on, meaning the keys can only go to first-time buyers.

With Help to Buy there are no geographic restrictions – you can buy a new build from a registered developer in any area of the country – and, when it comes to selling, your property will be available to the whole market. 

However, this freedom is balanced by the financial realities of securing a loan rather than a discount. The money borrowed to boost your deposit (up to 20% of a property price, rising to 40% in London) needs to be paid back, albeit you do not have to pay interest for the first five years.

The choice is yours… but it is not one that will be around for much longer with Help to Buy closing to new applications on 31 October 2022.

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As the Help to Buy scheme draws to a close, many first-time buyers are concerned about how they will get on the property ladder without any additional help. The good news is that, while Help to Buy winds down, a new government initiative is ramping up.

It’s called First Homes, and it’s designed to help first-time buyers reach their property dreams – with priority given to key workers and armed service personnel.

If you’re eligible for this initiative, you’ll be able to purchase a new property with a 30 – 50% discount on the market price. Putting this into practice, if a new build’s market value is £350k, you could purchase it with a 30% discount at £245k!

Below, we’ll answer some frequently asked questions about the First Homes scheme, so you can decide if it’s right for you. 

What is the First Home scheme? 

The First Homes scheme is a blossoming government initiative that provides discounted new-build homes to first-time buyers in England. It aims to help people purchase properties in their local communities instead of being priced out of the market. 

As a result, these homes are sold at a discounted rate of at least 30% compared to the market price. Local councils can choose to set deeper discounts in their area (of up to 50%) if property prices in the area are very high.  

To ensure the First Homes scheme is accessible to those who need it most, the government has put a price cap on these houses. After the discount, properties must cost less than £420,000 in London and £250,000 anywhere else in England.

Who is behind the First Homes initiative, and who pays for the discount?

The government is collaborating with property development companies across the country to make First Homes a reality. 

The scheme isn’t new, exactly. It was initially launched in June 2021 and piloted in the West Midlands, Staffordshire and Durham. These pilots proved a success, and looking to 2023, the scheme is set to accelerate across the country.  

The initiative in your community will be run by your local authority, which is responsible for working with property developers, setting the discount price and reviewing applications. 

The discounts are primarily funded by the property developers involved. They have to build a certain number of affordable homes to meet their planning agreement metrics. First Homes will help property developers to meet these targets. 

It’s important to note that the deductions applied aren’t one-offs either. The government wants this scheme to help generations of first-time buyers. As a result, when the property is re-sold, it will keep the percentage discount compared to the market value. 

Are First Homes different from regular new builds? 

Not at all! These houses are designed specifically to be comfortable first homes for new homeowners and are to the same specification as other new builds, even though they are sold at a discount. 

How much deposit do I need as a first-time buyer?

You will need a minimum of a 5% deposit to participate in the scheme. So, if a First Home is sold for £240,000, you’ll need a minimum deposit of £12,000.

Many leading lenders have agreed to 95% loan-to-value mortgages for the scheme, including:

1. Chorley Building Society

2. Darlington Building Society

3. Halifax

4. Leeds Building Society

5. Mansfield Building Society

6. Nationwide Building Society

7. Newcastle Building Society

What about the Help to Buy scheme in 2023?

The Help to Buy scheme officially concludes in March 2023, and applicants must submit their applications by the end of October. 

All is not lost, however! The First Homes scheme is a promising way for first-time buyers to get onto the property ladder, another fantastic option is Shared Ownership. 

Who is eligible for the First Homes scheme?

Properties in the programme are only available to first-time buyers who live and work in the local area. Local councils will also give preference to key workers and members of the armed forces.

You are eligible for the scheme if you: 

• Have an annual income of less than £80,000 (£90,000 in London). Note, if you plan to buy with a partner, your combined annual income must also be less than this, and you must both be first-time buyers.
• Want to remain in your local area but are struggling to identify a property within your price range. 
• Can obtain a mortgage for at least 50% of the purchase price after the discount. 

How do I apply for the First Homes scheme? 

Navigating the property process as a first-time buyer is undoubtedly daunting, but we’re here to help you every step of the way.

Here’s what happens when you buy a First Home: 

Step 1: We recommend you secure a mortgage in principle, which you’ll need to reserve your property.

Step 2: Keep an eye out for First Homes sites near you – or get in touch with us, and we’ll tell you about the latest houses in your area and check your eligibility. 

Step 3: When you find a property you like, we’ll help you reserve it with the house builder. They’ll then review your eligibility against the local criteria. 

Step 4: Once your eligibility is confirmed, it’s time to complete your application for the local authority.

Step 5: Now that your application is approved, we will receive an Authority to Proceed and Eligibility Certificate from your local authority on your behalf. 

Step 6: At this point, it’s time to formally submit your mortgage application and let us work on your purchase, so you can exchange contracts and officially buy your first home! 

What should I do next? 

If you’re interested in the First Homes programme, contact us today. We are here to guide you through every step of the process and turn your homeowner dreams into a reality! 

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