What is the first homes scheme?

Key takeaways

• The First Homes scheme offers first-time buyers a 30%-50% discount on new-build homes
• You'll need a household income under £80,000 (£90,000 in London) and a local connection to the area
• Key workers are prioritised, but other first-time buyers may be eligible
• You'll typically need a 5% deposit and a mortgage from a participating lender
• The discount stays with the property permanently - you'll need to pass it on when you sell

What is the first homes scheme?

Launched by the government in 2021, the First Homes scheme offers first-time buyers a discount of between 30%-50% on a new-build home close to where they already live or work. Key workers are prioritised, but other first-time buyers may be eligible if they can find a suitable property in their area.

Let’s imagine you want to buy a First Homes property with a market value of £200,000. If you’re a key worker and you work locally, you could buy the property with a 30% discount. This will reduce the property price by £60,000, bringing it to just £140,000. You won’t need to save as big a deposit, and your mortgage repayments will be lower.

One important thing to understand about the First Homes scheme is that the discount stays with the property permanently, even when you sell. So when you come to sell your home, the price discount you receive will need to be passed on to the next buyer.

So if, for example, you live in the property for 5 years and its value increases by 5% during this period, the new market value will be £210,000. If a 30% discount has been applied, the new buyer will pay just £147,000 for the home.

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Learn more: How to save money

Is the First Homes scheme still available?

Yes, the First Homes scheme is still available. However, not all new build properties are available through the scheme. The government has committed to adding a further 10,000 First Home properties each year.

However, the First Homes scheme is not the only way first-time buyers could buy sooner. Discover all the ways you could make home happen by completing your details online with Tembo - it’s free, and takes minutes. Get started here

Who is eligible for the First Homes scheme?

You may be eligible for the First Homes scheme if you’re a first-time buyer, have a household income of less than £80,000 (or £90,000 in London), and are paying no more than £250,000 for the property after the 30% discount has been applied (£420,000 in London).

You will also need to already work or live in the area you want to buy in, or have a local connection, such as growing up there or having family in the area. Key workers are prioritised under the scheme, but if you meet the other criteria you may still be eligible, even if you work in a different profession.

Keep in mind that the First Home scheme is not the only first-time buyer scheme out there. To see what you're eligible for without applying, complete your details with Tembo today.

Who counts as a key worker?

• Doctors
• Nurses
• Teachers
• Delivery drivers
• Supermarket staff
• Members of the Armed Forces
• Veterans

You might also be eligible for the First Homes scheme if you’re a divorced, separated or widowed spouse of someone within the Armed Forces.

If you’re in the Armed Forces, the Forces Help to Buy could be another option to get on the property ladder sooner.

Learn more: 6 reasons you should start saving for a house today

How much deposit do I need for the First Homes scheme?

You’ll usually need a 5% deposit to buy a home under the First Homes scheme. So if the property you want to buy will cost you £140,000 after the 30% discount has been applied, you’ll need a deposit of £7,000.

You’ll also need to get a First Homes mortgage from a participating lender. Although this restricts the number of lenders available, many high-street names such as Halifax and Nationwide have agreed to provide 95% mortgages to eligible buyers. See if you’re eligible here.

Is the First Homes scheme worth it?

Whether the First Homes scheme is worth it depends on you and your personal circumstances. If you’re a first-time buyer and you’re either struggling to save a deposit or you can’t afford the mortgage payments on a full-priced property, the First Home scheme could be the difference between renting and buying.

However, as with any home-buying scheme, there are potential downsides. For one, it can be difficult to find eligible properties. Unfortunately, there’s no centralised website where you can view all the eligible properties in one place. This means you’ll need to do quite a bit of research to find the right property.

We’d recommend starting with a simple Google search for First Home schemes in your area. You could try looking at the websites of participating developers such as Taylor Wimpey, Redrow and Barrett Homes, but since you’ll only be eligible for schemes in your area or locations you have a connection to, this could be quite time-consuming.

The other drawback of buying with the First Homes scheme is you won’t make as much money from the sale of the property. When you sell the property, you’ll need to pass on the 30%-50% discount to the new buyer. Although you’ll have benefited from a discount yourself when you bought the property, this may still be disappointing if you’re hoping to make a profit on your home.

How to apply for the First Homes scheme?

Once you’ve found an eligible property in your area, you can submit your application. If the property is brand new, contact the developer and apply through them. If it’s already been owned by another first-time buyer, you’ll need to apply through their estate agent. The developer or estate agent will help you complete your application and send it to the local council for approval. The local council will then check that you’re eligible for the scheme.

Once your eligibility is confirmed, the council will typically require a conveyancing solicitor to verify your first-time buyer status. Before you hire a conveyancer, ask for a breakdown of fees so you’ll know exactly how much you’ll need to set aside for their services.

If you’re buying a brand-new property, you may need to pay a reservation fee to the developer before they submit your application.

If your application is successful, you’ll then need to apply for a mortgage. The mortgage must cover at least half of the property’s purchase price, but if you’re buying with a small deposit, you’ll need a much bigger mortgage to make up the difference.

You can get a mortgage directly through a lender, but you can often find a much better deal by working with a specialist mortgage broker like us. We specialise in helping buyers who are struggling to get on the ladder, including using affordability-boosting schemes like First Homes.