Scheme aims to cut cost of some new homes by 30% for first-time buyers
The design of a new scheme to cut the cost of some new homes by around a third for first-time buyers is being consulted on by the Government.
The First Homes scheme could potentially save eligible first-time buyers in England nearly £100,000 on average.
The 30% market discount rate, giving people the opportunity to buy a home in their local area rather than having to move elsewhere, will be prioritised for key workers such as nurses, police officers and firefighters under the plans.
The Government said the discount will be paid for through the contributions that housing developers routinely provide through the planning system – which are an “established mechanism” for ensuring that new developments benefit local communities.
It said this means that the scheme will not result in extra building costs.
The scheme will apply the discount in perpetuity, so when the home is sold in the coming years the new local buyer will be able to purchase it at a discount as well.
The Government said the discount will apply to “a proportion” of new homes, and the consultation will look at how this will be delivered.
Veterans will be prioritised as part of the Armed Forces Covenant and councils will also be able to use the scheme for frontline workers in their area such as police, nurses, prison officers and teachers.
Housing Secretary Robert Jenrick said: “First Homes will be genuinely life-changing for people all over the country looking to buy their first home.
“I know that many who are seeking to buy their own home in their local areas have been forced out due to rising prices.
“A proportion of new homes will be made available at a 30% market discount rate – turning the dial on the dream of home ownership.
“The discount will be passed on with the sale of the property to future first-time buyers, helping thousands more people in years to come and ensuring local communities can stick together.”
The average price of a newly built home in England is £314,000.
Under First Homes, a property sold with 30% off at this price would deliver a saving of around £94,000.
The Government said the average newly built home in Cornwall, for example, costs £246,000, meaning a 30% discount delivers a saving of more than £73,000.
The Government has also committed to delivering more than one million new homes over the next five years to further improve housing affordability.
The Government envisages tens of thousands of First Homes being built, with measures also to help release more land.
Paula Higgins, chief executive of the Homeowners Alliance, said: “We know that first-time buyers will welcome the opportunity to buy a good quality home at a discount in their local area.
“We look forward to contributing to the consultation and working with the Government to ensure that the scheme does what it says on the tin – more high quality and affordable local homes for current and future first-time buyers.”
Councillor David Renard, housing spokesman at the Local Government Association, said: “Councils support measures to enable home ownership. It is important that this does not come at the expense of providing truly affordable homes for rent.
“Not everybody is ready to buy and we will be making the case in this consultation that local areas will need discretion on the number of First Homes required in new developments.
“This will allow councils to ensure a mix of homes – to rent and buy – are available and affordable to people that need them.”
“A genuine renaissance in council house building would increase housing supply, boost home ownership and reduce homelessness.”
He said the Government should use the forthcoming Budget to reform the Right to Buy scheme, by allowing councils to keep receipts of homes sold under Right to Buy in full and to have the flexibility to set discounts locally.