Homeownership schemes for first-time buyers

First Home Scheme

The First Homes scheme offers the chance to purchase a property at 30% to 50% less than its market value.

It could be a brand-new home from a developer or a property purchased by somebody who initially bought it through the scheme.

Eligibility
To benefit from this fantastic opportunity, you must be 18 or above and not a property owner before. Your household should have a total income not exceeding £80,000, and you would need the finances to secure a mortgage for at least half of the property value.

Be aware your local council might have their own conditions, so you may wish to check this. Also, depending on your council policies, priority will sometimes go to essential workers, local residents, and those on tighter budgets.

How it works
If you’re ready to join the First Homes Scheme, search for available properties in your area offered by developers. The homes will have a generous 30% to 50% discount on their market value. Each property is assessed by an independent surveyor, ensuring you get a fair deal, too. Keep in mind that your chosen home must not exceed £250,000 after the discount.

In the future, if you wish to sell, your buyer must be eligible for the First Home scheme. Then, the same percentage discount you enjoyed is passed on, based on the property market value at the time of sale.

How to get started
Ready to make your move? If purchasing from a previous First Homes buyer, you’ll need to contact the developer or estate agent. They’ll guide you through the application process, which may include a fee for new builds. If your application doesn’t go through for any reason, you’ll receive the fee back.

Lifetime ISA

When it comes to buying your first home, Lifetime ISA could be a game-changer.

Eligibility
You can use your savings to help you buy your first home as long as the following apply:
• The property’s price tag is £450,000 or less.
• You start the buying process a minimum of 12 months after the first payment into your Lifetime ISA.
• A conveyancer or solicitor represents you in the purchase, as the ISA provider will transfer the funds directly to them.
• You are buying the home with a mortgage and the Lifetime ISA savings.

Buying with a partner
The bonus about buying a home with another Lifetime ISA holder is that you can use both of your savings, plus the government bonus. To make this work, you must both be a first-time buyer and meet the above conditions.

Shared Ownership

Shared ownership is when you purchase a share of the property, paying rent for the remaining portion.

How it works
The percentage of your share would typically range from 25% to 75%.

Your share should be financed with a mortgage or savings, and you’d make a deposit of 5 to 10% of the property share’s value. Then, based on the landlord share, you’d pay rent monthly ground rent, and service charges.

It is possible to gain a larger share in the future, too, with a process known as staircasing. Of course, the more shares you own, the bigger your investment and the less rent you pay.

What types of homes are available?
You might be able to buy a new-build home, an existing shared ownership resale property, or a home tailored to your own needs, especially if you have a long-term disability. The property will be leasehold.

Where can I find a shared ownership home?
Housing associations, local councils, and other providers offer shared ownership homes, whilst resale homes on the scheme are sometimes for sale with estate agents.

If you’re searching for a home, please take a look at our website, here. If you’re a first-time buyer you could benefit from financial advice, and we’d be happy to introduce you to an independent financial advisor.

Sources:

Affordable home ownership schemes – GOV.UK (www.gov.uk)

First Homes scheme: discounts for first-time buyers – GOV.UK (www.gov.uk)

Lifetime ISA – GOV.UK (www.gov.uk)

Shared ownership homes: buying, improving and selling: How shared ownership works – GOV.UK (www.gov.uk)