Local buyers offered new support scheme

11th February 2020

When it comes to solving the challenge of the UK housing market, governments tend to favour schemes that make it easier to buy a property that already exists, than face up to the issue of increasing the number of properties available.

Whilst it’s easy to say ‘build more houses’ it is difficult to enact as a policy, given that house-builders are private organisations and any significant uplift in supply will require a huge increase in skilled trades people, to say nothing of the supply of bricks, concrete, timber etc.

It is this focus on purchasing over building that ensured schemes like First Homes, which was mentioned in the most recent Queen’s Speech, attract the interest and support of government.

First Homes First Look

At its most basic, the First Homes scheme will offer local people a 30% discount when they buy their first home, with a further emphasis being placed on helping ‘key workers’ get onto the property ladder.

The concept is not new and is clearly intended to replace the Help to Buy scheme, which after a 10-year run is due to end altogether by 2023. A similar scheme was suggested back 2014, when the government promised a 20% discount for people buying one of the 200,000 proposed ‘starter homes’.

It was revealed that £2bn had been set aside to fund the building of the first 60,000 of these homes, due to be completed by the end of the decade. But the National Audit Office revealed the relevant legislation was never implemented and so not a single starter homes has been built.

Whilst any attempt to make it easier for people to buy their first home is to be applauded, the main issue with the latest scheme, as it has been outlined so far, stems from the almost total lack of detail.

Key questions yet to be answered, include ‘how exactly will a ‘local’ person be defined? And how will the 30% discount in the market value of a property be funded?

The government has stated that; ‘the discount on First Homes will be secured through a covenant, which means the homes will remain discounted in perpetuity, supporting people now and in the future who aspire to own a home of their own.’

It’s assumed that the scheme will revolve around new-build houses, which prompts the question of how developers will be persuaded to part with their properties at 30% below market value, without resorting to lowering the standards of the completed homes.

The fact that a hefty subsidy from the government to developers and/or local authorities will have to be funded, raises questions about the type of properties the scheme will support – will it be only new-build or new build and exiting properties? Will it apply to social housing, private developments or both?

Looking for answers in the detail

The scheme is currently out for consultation, which hopefully means we’ll eventually have the answers to questions such as whether buyers will be able to sell the property on at a later date for the full market value (as is the case with Right to Buy properties).

If the answers yes, then the scheme will surely inflate prices for the next generation of buyers, whereas if it’s no then how will home owners ever be in a position to trade up to something more expensive?

Other aspects of the scheme that are still opaque include how anyone will demonstrate their ‘localness’. Will buyers need to have been born in an area or merely to have lived there for a set period? And what criteria will be set for the key workers also mentioned as targets for the scheme?

Without the details, there must be a risk that even the prospect of the scheme could lead to a cooling of the market, as buyers delay decisions as they wait to see if they qualify for a 30% discount in a few months’ time.

However, there is general agreement across the industry that an increase in the supply of housing rather than making it easier to purchase existing or even newly built stock is what the UK housing market needs most.

If you cannot wait to see what happens and are ready to buy your new home and want to discuss your options with an experienced residential property team, please contact Julie Tomasik, our Head of Residential Conveyancing on 0121 716 3732 or email