How does the First Homes scheme discount work for first-time buyers?

Full answer

First Homes is an English government scheme aimed at helping first-time buyers and key workers onto the property ladder. Selected new-build homes are sold at a discount of at least 30% (local councils can set a higher discount, such as 40% or 50%, in high-cost areas) below their open-market value. Crucially, the discount does not disappear when you sell. A restriction is registered against the property's title requiring you to pass on the same percentage discount to the next eligible buyer, so the home stays affordable for future first-time buyers in perpetuity. To qualify you generally must be a first-time buyer, occupy the home as your only residence, and meet income and price caps set nationally and sometimes tightened locally. Councils can also prioritise local residents and key workers. A worked example shows the appeal: a home valued at GBP 250,000 on the open market sold with a 30% First Homes discount costs you GBP 175,000. You need a mortgage and deposit based on the GBP 175,000 figure, not the full value, which lowers your borrowing and deposit. When you later sell, you must sell at 30% below that future market value to the next eligible buyer. Stamp Duty Land Tax is calculated on the discounted price you actually pay, which can reduce or remove your liability, especially with first-time buyer SDLT relief - check the current SDLT bands and first-time buyer thresholds with a stamp duty calculator rather than assuming them. Lenders must accept the title restriction, so use a mortgage that is compatible with the scheme. Model both the loan on the discounted price and the SDLT before committing, as the lower purchase price changes both figures.

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