InSite | What the First Homes Scheme Means for the Industry

Government are seeking consultation on their newly launched First Homes policy, which could offer first time buyers a 30% discount on newly built homes.

Here we outline what the policy is and how it will affect the industry.


What is First Homes?

In a bid to assist first time homebuyers on to the property market, the First Homes Scheme aims to create purpose built flats and houses, which are to be sold at a discount of at least 30% across England.


From the government’s consultation paper, it is proposed that local people should get first refusal on First Homes sold throughout the scheme to ensure that they are not priced out of the communities in which they live and work.


Currently the Discounted Market Sale Housing scheme offers a 20% discount on open market prices. However, in their paper, government recognise that this discount is not substantial enough, nor is the scheme building the amount of houses needed, with only 1000 of these homes being built per year.


A target amount of homes set to be built through the First Home scheme, or who will be building them, is yet to be outlined.


How will it work?

To ensure long-term benefits for local communities, government outline that properties built for the scheme will retain their discount when they are sold, meaning that the property will be sold at the original percentage discount in each subsequent sale.


The housing secretary has claimed that this discount will initially be funded through the contributions that housing developers routinely provide through the planning system, otherwise known as planning obligations.


So far, there is no maximum level of discount set, and it’s thought that this will be left to Local Authorities and developers to agree.


Will it be legislated?

Government through their consultation are considering legislative and non-legislative options for delivery.


They are currently considering a number of options, including:

• Creating new requirements for developers to deliver these First Homes alongside market housing, either through changes to planning policy (section 106 agreements), or legislation.
• Amend the existing entry-level exception site policy to a First Home exception policy.
• Amending secondary legislation to exempt First Homes from the Community Infrastructure Levy (CIL)


When will it come into practice?

The Governments Guide to First Homes suggests that they are trying to deliver the scheme ‘as quickly as possible’, stating that details will be released later this year.


However, we are still waiting on the delivery of the governments similar ‘Starter Homes Initiative’ that was announced back in 2014 by then chancellor George Osbourne. That scheme proposed building 200,000 new homes on brownfield land and selling them to first-time buyers under 40 at 20% discount.


So far, none of the proposed homes have been built even though in 2018 the government stated that ‘work is getting underway’ with 30 local authorities that had signed up to the pilot scheme.

Sector Concerns

• Developer contributions – the sector has queried the effect of diverting developer contributions to fund these discounts considering these commitments are used to improve local community infrastructure. As these improvements are an important tool in overcoming the objections of local communities to new developments, will diverting these contributions into discount for new buyers exuberate the fears of local residents and make the new builds less likely to be built?

• Putting Social Housing at Risk – Housing charity Shelter believes that the policy is putting at risk the social homes currently being built referring to governments attempts at fixing the housing crisis as ‘shuffling the deck chairs on the Titanic’.

• Moving up the market – questions have also been raised about the long-term effects of locking in the discount on these properties. Concerns have been raised how the first set of buyers will be able to move onto the more expensive open property market when they decide to sell their First Home discounted property.


Consultation of this policy and it implementation is currently underway and will close at 11:45pm on 3rd April 2020. To have your say visit


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