First-timers to be given 30pc off cost of new house

First Homes scheme could help first-time owners buy property in local area, with possible discount of £94k

FIRST-TIME buyers will be given a discount of 30 per cent on the price of some new-build homes under a scheme being announced by ministers today.

The First Homes scheme could slash the cost of the average eligible newbuild home by £94,000.

The Government will force developers to foot the bill by making planning permission for new estates conditional on a certain proportion of houses being “affordable”.

Military veterans and key workers such as nurses, police officers, teachers and firefighters will be given priority, but thousands of people in other jobs will also benefit each year.

The discount will be “locked in” to the property, meaning that when homeowners move up the housing ladder they have to sell the house with a 30 per cent discount on its market value.

Robert Jenrick, the Housing Secretary, claimed the scheme would be “genuinely life-changing” for a whole generation of people hoping to buy their first home.

Boris Johnson has made housebuilding one of his administration’s top priorities after identifying the housing crisis as one of the issues of most concern to younger voters.

Making good on a manifesto promise to build 300,000 more properties a year and give first-time buyers more help to afford them is seen as key to winning the next election in five years’ time.

One of the aims of the First Homes scheme is to help first-time buyers who would otherwise be priced out of the market in their home towns.

Mr 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.”

It will be up to local authorities to define what constitutes a “local buyer” and to agree with developers the mix of homes that should be offered.

The Ministry of Housing, Communities and Local Government will carry out a consultation to decide what proportion of new-build properties should be offered at a discount.

Independent surveyors will determine the market value of the properties before the discount is calculated.

The ministry said the discount would apply “in perpetuity”, meaning a covenant on the property would force each owner to sell it on with a 30 per cent discount so that the benefit is passed down the generations.

If the property increases in value, the owner will pocket two thirds of the profit, helping them to buy their next home, with one third being wrapped into the discount.

Surveyors will revalue the property and reapply the discount every time the home is sold.

Ministers will set a cap on the price of new-build homes that qualify for the scheme, which is yet to be determined.

The average price of a new-build home is £314,000, meaning a 30 per cent discount would equate to £94,000. In Cornwall, the figure is £246,000, meaning a saving of almost £74,000.

Paula Higgins, chief executive of the Homeowners Alliance, welcomed the scheme but said she would make sure the Government delivered “what it says on the tin”.

The National Housing Federation, which represents housing associations, said it was “concerned” that the scheme would encourage developers to build homes to sell on the open market, rather than building homes to sell to housing associations.

The Government said it would be up to local councils to decide how many of each type of property should be built.

The First Homes scheme will run alongside existing government aid on house buying, such as Help To Buy and Shared Ownership.

Under Help To Buy, the Government lends buyers up to 40 per cent of the cost of a property which they must either pay back when they can afford it or pay it back when the property is sold.

According to government figures, 190,000 people have bought homes using Help To Buy, which helped push up the number of first-time buyers to 357,090, an 11-year high.

Under Shared Ownership, buyers part-own and part-rent a property, increasing the proportion they own as and when they can afford it.

Individual properties will only be available under one specific scheme.