is the First Homes scheme a good idea

Wojciech

Wojciech

Diploma for Financial Advisers
Diploma in Accounting
Member of London Institute of Banking and Finance


For many first-time buyers, owning a home feels impossible as prices keep rising. To tackle this, the UK government launched the First Homes scheme. But is the First Homes scheme a good idea? Let’s explore how it works, who qualifies, and whether it’s worth your time.


What Is the First Homes Scheme?

The First Homes scheme helps first-time buyers in England purchase a home at a 30–50% discount off the market price. For example, a home worth £250,000 could cost you £175,000 with a 30% discount. This discount stays with the property forever, meaning future buyers also benefit. The goal is to make homeownership achievable for people with lower incomes or key workers like teachers, nurses, and emergency service staff.

To qualify, you must:

  • Be a first-time buyer.
  • Have a household income under £80,000 (£90,000 in London).
  • Get a mortgage for at least 50% of the discounted price.
  • Buy a home in England (local councils may add extra rules, like prioritising local residents).

How Does the First Homes Scheme Work?

  1. Discounts Are Locked In
    The discount applies to new-build homes or ones sold through the scheme. If you buy a home at 30% off, the next buyer must also purchase it at 30% below market value. This keeps homes affordable long-term.
  2. Lower Deposits and Mortgages
    A smaller price tag means you’ll need a smaller deposit. For example, a 10% deposit on a £140,000 home is £14,000, compared to £20,000 for a £200,000 property. Your mortgage repayments will also be lower.
  3. Priority for Key Workers
    Local councils often prioritise key workers and residents, making it easier for those serving the community to stay in their area.

Pros of the First Homes Scheme

  1. Big Savings
    A 30–50% discount is a huge help for buyers struggling with high prices.
  2. Helps Local Communities
    By prioritising locals and key workers, the scheme keeps communities together.
  3. Long-Term Affordability
    The discount stays with the home, so future generations benefit too.
  4. Easier to Get a Mortgage
    With lower prices, banks may see you as less of a risk, improving your chances of approval.

Cons of the First Homes Scheme

  1. Limited Availability
    Not all areas have First Homes properties, and waiting lists can be long.
  2. Strict Eligibility Rules
    Income caps and first-time buyer status exclude many people.
  3. Resale Restrictions
    You must sell the home to another eligible buyer at the same discount, which could slow down the process.
  4. Regional Price Differences
    In expensive areas, even a 30% discount might not make homes affordable for everyone.

Is the First Homes Scheme a Good Idea for You?

The answer depends on your situation. If you’re a first-time buyer with a lower income (especially a key worker), this scheme could be life-changing. The discount reduces upfront costs and makes monthly payments more manageable. However, if you earn above the income cap, live in an area with no First Homes properties, or want flexibility when selling, the scheme might not suit you.


Alternatives to the First Homes Scheme

If the First Homes scheme doesn’t fit your needs, consider these options:

  • Shared Ownership: Buy a 25–75% share of a home and pay rent on the rest.
  • Help to Buy ISA: Save tax-free for a deposit (closed to new applicants but still active for existing users).
  • Lifetime ISA: Save up to £4,000 a year with a 25% government bonus.

Final Thoughts: Is the First Homes Scheme a Good Idea?

The First Homes scheme is a smart solution for some but not a fix for everyone. It tackles the affordability crisis by locking in discounts and supporting key workers, but limited availability and strict rules hold it back. If you meet the criteria, it’s worth exploring. Check the official government page for updates and application details.

So, is the First Homes scheme a good idea? For those who qualify, it’s a brilliant chance to own a home. For others, alternative schemes might be better. Always research thoroughly and seek financial advice before deciding.


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