Pro-lender clauses to encourage First Home scheme support

Pro-lender clauses to encourage First Home scheme support

 

The Conservative government is particularly keen for the policy to succeed after its Starter Homes project failed completely with no new properties being built despite costing £196m.

There is currently low availability of mortgages for homes sold at market discount, but the government is consulting on ways to improve lender competition in the market.

This includes a proposed clause that would allow lenders to waive restrictions on the property, including the policy requirement to sell the home at a discount in the event of a repossession.

Properties under the First Homes scheme will have a discount locked into the home, which will then be passed on to future buyers taking their first rung on the property ladder.

The initiative could save a buyer £94,000 on the average £314,000 price of new-build property.

And means a buyer would require £18,000 less for a 20 per cent deposit.

 

Public services prioritised

It is hoped First Homes will stop people being forced out of their local area by rising house prices.

Veterans will be prioritised for the scheme as part of the Armed Forces Covenant, while councils will also be able to use the scheme for key workers such as police, nurses, prison officers and teachers.

The discount will apply to a proportion of new homes, with the government consulting on how this will work in practice.

The scheme is likely to feature a price cap on the value of homes qualifying for the scheme, similar to the national limits placed on Help to Buy or with more regional variation.

An income cap on buyers eligible for the scheme is also likely, and buyers must use the property as their sole residence and not turn it into a buy to let.

Housing secretary Robert Jenrick said: “I know that many who are seeking to buy their own home in their local areas have been forced out due to rising prices.

“A proportion of new homes will be made available at a 30 per cent market discount rate – turning the dial on the dream of home ownership.

“The discount will be passed on with the sale of the property to future first-time buyers, helping thousands more people in years to come and ensuring local communities can stick together.”