Here is a some sound advice on the government's First Home scheme

The First Homes Scheme offers a helping hand for first-time buyers and key workers in the UK, especially when they are already feeling the pinch. Promoting affordable homeownership, the initiative assists those who meet the criteria to buy a new build home.

Offering substantial discounts, this scheme can give a much needed leg up for those who might otherwise not be able to afford to buy.

Richard Wisnia, director and head of new build conveyancing at Switalskis, shares insights into key elements of the First Homes Scheme through a legal lens. This should help buyers to make informed decisions when considering the scheme.

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Understanding the scheme is key. The First Homes Scheme was introduced by the UK government in 2021 and its main aims are to provide new build homes to first-time buyers and key workers at a percentage discount from the open market value.

Getting the key to your own homeGetting the key to your own home
Getting the key to your own home

All future dealings on the property will be based on that percentage of the open market value at the appropriate time. This helps to retain the affordability of the property in perpetuity, which is the point of this scheme.

Although not all local authorities have adopted the scheme, Switalskis is seeing discounts of at least 30 per cent below market value in those areas which have.

Central to the initiative is the formal “Authority to Proceed” or ATP, which is the local authority’s approval for the buyer to purchase a property under the scheme.

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The ATP includes the key financial aspects of the transaction. It outlines important details including the full market value of the property, the discount percentage applied and the First Homes discounted purchase price.

Buyers must thoroughly check these details to avoid any discrepancies.

The local authority will control the future sale process to ensure that future owners satisfy the relevant criteria. Should the buyer decide to sell, their first task will be to notify the local authority which will source a buyer.

The scheme is, understandably, attractive to first-time buyers. However, only a limited pool of mortgage lenders will lend on houses bought under the scheme.

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So, this is both a narrow pool for your initial purchase and for any future remortgage of the property.

Thankfully, a sensible approach to Stamp Duty Land Tax, aka SDLT,has been taken, as only the First Homes price will be relevant. This ensures that buyers under the scheme will benefit from the SDLT first-time buyer relief.

Who is eligible to purchase under the scheme? Only genuine first-time buyers can buy under the First Homes Scheme.

This is a specifically defined category of buyer created by HMRC for stamp duty purposes and applied in the scheme.

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So, buyers must read and sign a declaration which confirms to the solicitor and local authority that they satisfy this definition.

In addition, the following criteria must be met: The property must be occupied as the principal residence, a household’s income must not be greater than £80,000 or £90,000 in London.

The buyer must also have a mortgage for at least 50 per cent of the First Home purchase price.

It is critical for buyers to check the information provided during the application process is accurate and honest to maintain eligibility under the scheme.

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The scheme also includes limitations on the future resale price to ensure that the property remains affordable, as well as restrictions on the occupancy.

Understanding these restrictions is essential. Navigating the First Homes Scheme requires a comprehensive understanding of its ins and outs