First Homes scheme consultation

The Government has launched a consultation on the First Homes scheme. The Government notes that the aim of the scheme is to “give people the opportunity to buy a discounted home, rather than be forced to look elsewhere”. The consultation document suggests the scheme will save first-time buyers around £100,000 on the price of an average property.

Points of note from the consultation include the following.

• First refusal for local people. The proposal is that the definition will be at the discretion of the Local Authority and could be based on residency or work location. There will be special considerations for those in the Armed Forces. The offer will also be time limited.
• First time buyers are to be prioritised but views are sought on the circumstances in which Local Authorities should allow non-first-time buyers to access First Homes on the same basis as first-time buyers. The consultation also questions whether key workers should have access to the scheme and whether there should be an income cap.
• 30% discount off market price should be the minimum offered. Local Authorities will have the discretion to set higher discounts on a site by site basis. The Government does not propose setting a maximum level of discount.
• The Government is considering a cap on the value of properties which are available through the scheme – views are sought as to whether this should be a regional or national cap.
• The discount will run in perpetuity. This will be achieved by way of restrictive covenants on the property. However, the Government notes it is minded to leave the details of administration to Local Authorities.
• The consultation contains three proposals in relation to mortgage lending:
  • introducing a model agreement for First Homes, the hope being that a standardised approach will make it easier for mortgage lenders to move into the sector by reducing the need for them to deal with a variety of models;
  • a mortgagee protection clause which in the case of default would allow a sale free from the discount; and
  • homes purchased under the scheme not being eligible for the Help to Buy Equity Loan programme.
• Purchasers of First Homes will be restricted to using the property as their sole or primary residence. Views are sought on what flexibility there should be in relation to this.
• The consultation explores the options for delivering the initiative through the planning system.

The consultation is open until 3 April 2020.

The Government has also announced that legislation will be introduced that will require developers to belong to a New Homes Ombudsman scheme and provided further details on the new Help to Buy scheme.