According to a statement earlier this week, the minister of state for housing Christopher Pincher said that it was important that price caps provided “clarity and consistency” to support consumers, developers, and mortgage lenders, which its current system did.
He said its current price cap system, which states after the discount properties should be priced at no higher that £250,000 or £420,000 in Greater London, would ensure that at least 25 per cent of properties purchased by first-time buyers in England and Greater London would be included.
Pincher said: “Local authorities have the flexibility to lower these price caps if appropriate for their local housing markets or, crucially, to raise the minimum discount required to either 40 per cent or 50 per cent, to ensure that high-value areas are able to capture a greater variety of housing types and sizes.”
The First Homes scheme was introduced earlier this year and aims to provide homes for first-time buyers at a minimum discount of 30 per cent.
Seven lenders, including Chorley Building Society, Darlington Building Society, Halifax, Leeds Building Society, Mansfield Building Society, Nationwide Building Society and Newcastle Building Society, have said that they will be providing 95 per cent loan to value mortgages for the scheme.
The Mortgage Advice Bureau has also teamed up with Keepmoat to be the first mortgage broker to advise on the government scheme.
Whilst most brokers are cautiously optimistic about the scheme, some concerns have been expressed around the rollout of the scheme, especially if all 343 local authorities in England take a different approach to discounting.
Some brokers, who asked to remain anonymous, suggested that if local authorities took an individual approach that it would create confusion for consumers and brokers and could impact takeup of the scheme.
Pincher also said there were no plans to provide additional financial support to property developers to support the progress of the scheme through the planning system.
He said: “Our assumption is that First Homes will have minimal financial implications for property developers. This is because First Homes will only change the tenure mix that developer contributions are spent on, not the overall value of those contributions. In future, 25 per cent of all affordable homes delivered by developers as part of their obligatory contributions will be First Homes.”
He said the scheme will be delivered by developer contributions and First Homes exception sites, and this had been implemented with changes to planning policy in June.
“This will result in no change to property developers’ financial contributions to affordable housing and no additional financial support will be provided,” he said.
However, he noted that as part of its pilot scheme, which aims to deliver 1,500 homes, financial support in the form of grant payments would be given to developers.