Discount starter homes scheme

What is the First Homes scheme and how does it work?

The government's First Home Scheme could help you get a discount on the property price as a first-time buyer. Discover how it works and if you're eligible.

First-time buyers typically have a mountain to climb to get on the property ladder. A report in 2024 from the Building Societies Association stated that first-time buyers are facing the toughest conditions for 70 years .

Thankfully, the UK government has a number of schemes to offer vital assistance.

One of these is the First Homes scheme, which is a scheme that gives you a discount on certain new build properties. We reveal what you need to know.

• The First Homes scheme provides discounted homes to eligible first-time buyers in England.
• The scheme may allow you to buy a home for 30% to 50% less than its market value.
• To qualify, you must be a first-time buyer and planning to purchase a property in your local area.

What is the First Homes scheme?

The First Homes scheme is a policy that provides discounted homes to eligible first-time buyers in England who otherwise wouldn’t be able to afford one.

Under this scheme, first-time buyers can buy a new-build home in their local area at a discount of at least 30% on the market price.

As the scheme is applicable for houses up to £250,000 across the UK, this would equate to at least a saving of £75,000, while for buyers in London with a maximum price cap of £420,000 on purchases, the discount could be at least £126,000.

This would be a huge saving for first-time buyers and help them get onto the property ladder.

How does the First Homes scheme work?

The First Homes scheme involves the building of new homes specifically to be sold at a discount, and are of a similar specification to full-price homes.

Homes will then be put on the market at a discount of at least 30%. This discount, however, can be increased by local councils to up to 50%, such as in areas where property prices are very high.

These properties must be purchased by first-time buyers. If buying as a couple, neither partner can have previously owned a home. Otherwise, the properties are bought and sold as normal.

If and when the first-time buyer decides to sell the property, the home will be independently valued, and the scheme discount will be re-applied to this new value for the next owner.

This will ensure homes are always sold below the market price and will continue benefitting future generations of first-time buyers.

Who is eligible for the First Homes scheme?

The following criteria apply to all purchasers involved in buying the home:

• You must be a first-time buyer.
• You’ll also need to buy within your local area, with the intention of living in the property (it cannot be a holiday home or buy-to-let).

Although the scheme is open to everyone, certain professions will also take priority. This includes serving members and veterans of the armed forces and key workers, including nurses, police, firefighters, and teachers.

Finally, to ensure the scheme helps those most in need, the government has also listed some price caps.

• Caps on property prices: Properties under the scheme are subject to a £250,000 price cap across England, after the discount. A higher cap of £420,000 applies in London.
• Caps on household income: Buyers’ combined income is capped at £80,000 across England and at £90,000 in London. However, local planning authorities will be able to set lower caps for the first three months of sale.