All about the first homes scheme London for local first time buyers
London based first-time buyers are looking for new affordable ways to take their first step onto the property ladder. One of these ways is the First Home Scheme London, which allows local first-time buyers to buy a home at a discount.
What is the first homes scheme?
With the First Home Scheme London, new homes are being built to be sold at a discount of at least 30% to first-time buyers, though this discount can be as high as 50% if the local authority choose to increase it. When the property is sold, it must be sold with the same discount applied to the new price (so if you purchased with a 35% discount, the property will be sold with a 35% discount) and must be sold to another buyer eligible for the First Home Scheme.
Who is the First Home Scheme for?
Only local first-time buyers qualify for the First Home Scheme. Couples purchasing a home together are only eligible if both are first-time buyers. The home you buy will need to be within your local area and you must buy it with the intention of living in the property yourself, not renting it out or using it for commercial purposes. Key workers who are first-time buyers take first priority for the scheme, although first-time buyers from all professions may still be eligible. This is to ensure key workers can afford to live in their place of work. Local authorities will have different criteria which define a key worker, which could include NHS staff, police officers, members of the armed forces, teachers and supermarket staff. Generally speaking, it could be anyone needed to keep their local community running. There is also a limit on the maximum property price and on the household income you can be receiving to still be eligible for the scheme. At the time of writing, the property you purchase can have a maximum price of £250,000 (£420,000 for properties in London) after the discount is applied. Eligible buyers must have a combined income of less than £80,000 per annum (£90,000 for those buying a home in London). Local authorities do have the power to lower the price caps of property and maximum income.
What are the benefits of the First Home Scheme?
Naturally, the biggest benefit of the First Home Scheme is that it gives more first time buyers a chance to get onto the property ladder in the face of rising house prices. It has some advantages that other schemes dedicated to help first time buyers have not had. For example, you will own the entirety of your home from the outset with the First Home scheme, which Shared Ownership does not offer. 30% is a significant discount – a house which would otherwise cost you £300,000 now costs just £210,000. You also wouldn’t need to pay stamp duty on such a property because the First Home discount would take you below the First-time buyer stamp duty threshold (unless you’re purchasing a property in London).
How will Stamp Duty be Calculated?
As a first-time buyer, you are automatically entitled to a discounted rate of Stamp Duty Land Tax (SDLT) regardless of whether or not your new home is under the First Home Scheme. You will not need to pay any Stamp Duty for purchases worth less than £300,000, and still pay a reduced rate for properties worth more than this amount. As a result, unless you are buying a home in London, you will probably not need to pay any stamp duty on your first homes scheme purchase. If you are buying a property in London, the stamp duty you pay will likely be calculated based on the discounted price.
To get an idea of stamp duty rates for first time buyers, try our first time buyers stamp duty calculator.
Do I need a deposit to buy a home under the First Home scheme?
You will need a deposit, but the amount you will need is generally smaller than that which you would need buying a home normally due to the reduction in price. Using the same example from earlier, if you needed a 10% deposit for the £300,000 house, you would normally need a deposit of £30,000 – but, because the price has been reduced to £210,000, you now only need £21,000.
How do I apply for the First Home Scheme?
What you will need to do is generally as follows:
- Check if you’re eligible – Find out which local builders or developers are offering properties under the First Homes scheme and get in touch with them directly to see if you’re eligible. They can confirm with you whether you fit both national and local eligibility criteria, and then help you make your application to the local authority.
- Apply for a mortgage in principle – Before you can do anything, you need to know how much you can afford, and which lender offers the best deals for you. Some lenders are beginning to offer First Homes Mortgages. It is a good idea to speak to an independent mortgage broker for unbiased mortgage advice. For recommendations tailored to you from across the whole of the mortgage market, make an appointment with Starck Uberoi Wealth on 020 8037 4027 or at info@suwealth.co.uk.
- Find your property – Not all areas are currently offering homes under the scheme yet, so check to see if any builders and developers are offering properties in your area. Once you’ve found the property you’d like to buy, you will need to pay a fee to reserve it.
- Your application is reviewed – You’ll need to legally confirm that you and anyone you are buying with are first time buyers. The local authority will check again that you are eligible for the First Home scheme then give you an “Authority to Proceed” and Eligibility certificate.
- You instruct a conveyancer and apply for your mortgage – Once you’ve received your authority to proceed you can apply for a mortgage and instruct your conveyancer. At the time of writing, the First Home Scheme is relatively new, so it is important to ensure you instruct a conveyancing solicitor with up-to-date knowledge. Our solicitors at Starck Uberoi not only have extensive experience with handling conveyancing under other housing schemes, but provide a proactive, forward-thinking service to each and every client. See our conveyancing pages for more information on the high-quality service we provide.
- Completion – After you’ve received your mortgage offer, the conveyancing process will begin. Your solicitor will perform the relevant searches and raise enquiries, exchange contracts with the solicitor once you’re happy, apply for your mortgage money and eventually complete.
How long does it take to buy a home with the first home scheme London?
It is difficult to give an answer to this question as so much depends on the response rate of the builders/developers and your local authority. However, it should not make the conveyancing progress take much longer than it would for a regular home purchase. To reduce the risk of delays, it is important to ensure all paperwork is completed correctly and as quickly as possible. Find out how our solicitors keep the conveyancing process fast.
Can I combine my Help to Buy equity loan with the First Home Scheme London?
Unfortunately, no. The two schemes cannot be used together.
Are there any downsides to the first homes scheme?
There are a few negatives to the scheme to take into account:
- Just because you can get a 30% discount on a property doesn’t guarantee that it will still be cheaper than other properties in your area. You will still need to make sure you research other properties in the area.
- Unless you’re a member of the army or a recent veteran, you can only use the first home scheme for properties in your local area. You won’t have the freedom to relocate.
- You can only buy new build homes specifically built under the first home scheme.
- There is currently still limited availability, so those living in more expensive areas will have to face a lot of competition for homes.
- The discount will be reapplied at the property’s sale. While this is partly a good thing because it will keep some homes affordable, it is less good news for the seller who will have to sell it for less than its full worth and only to a buyer eligible for the First Home scheme.
Is the first homes scheme London right for me?
For many first-time buyers, it can be an excellent option for getting onto the property ladder. If you’re happy to stay in your local area and to buy a new build property, this can be the best option for you. However, there are other government schemes available which could be better for you. For example, Shared Ownership may be a better idea for you as it does not have the same restrictions and there is a lot less competition. Alternatively, if you currently rent a council house or flat, you could buy it for a reduced price with the Right to Buy scheme.
How Starck Uberoi can help
If you’re new to the conveyancing process, our solicitors can guide you through it with ease. We take a proactive, client-focused approach: each client will receive a point of contact with their dedicated solicitor, who will take the time to answer any questions you may have. We are law-society accredited under the Conveyancing Quality Scheme (CQS) and on the mortgage lender panels for the majority of lenders including Barclays, Halifax, HSBC, Nationwide, NatWest and Santander. Get started with a full breakdown of our fees from online conveyancing quote. To book an appointment, please call 020 8840 6640 or email solicitor@starckuberoi.co.uk. Our offices are located in Brentford, Ealing, London Belgravia and Canterbury, all within easy reach by public transport. Our partner, Raminder Uberoi, can also provide a Notary Public Service at any of our London offices.
