First Homes Scheme 2026: How the Discount Works for Buyers
A plain-English guide to the First Homes scheme in 2026 - who qualifies, how the 30 percent discount works, price caps, mortgage rules and the catch on resale.
Quick answer
The First Homes scheme is an England-only government programme that lets eligible first-time buyers purchase a designated new-build home at a discount of at least 30 percent off its open-market value. The discount is permanent and passes to every future buyer. After discount the price is capped at GBP 250,000 (GBP 420,000 in London), and household income must not exceed GBP 80,000 (GBP 90,000 in London).
How the discount actually works
The headline number is simple: at least 30 percent off the open-market value, with some councils setting a higher 40 or 50 percent discount in the least affordable areas. The important part is what happens to that discount over time. It is not a grant you pocket and forget. It is a legal restriction registered against the property's title, and it travels with the home for good.
Here is a worked example of how the price is built up. Suppose a developer values a new-build at GBP 250,000 on the open market and the local council applies a 30 percent First Homes discount.
| Item | Amount |
|---|---|
| Open-market value | GBP 250,000 |
| First Homes discount (30 percent) | GBP 75,000 |
| Price you pay | GBP 175,000 |
| Discount registered against title | 30 percent (permanent) |
When you eventually sell, you must sell at that same 30 percent discount off the future open-market value. If the home is worth GBP 300,000 by then, the next eligible buyer pays GBP 210,000, not the full market price. You keep the growth on your discounted share, but the local market never gets to price the home freely while the restriction stands.
Who qualifies in 2026
Eligibility has a national baseline, and then local councils can layer extra priorities on top. The national rules are:
- You are at least 18 years old.
- You are a first-time buyer - you have never owned a home anywhere in the world.
- You can fund at least half the purchase price with a mortgage or your own savings, rather than other equity loans.
- Your combined household income is no more than GBP 80,000, or GBP 90,000 in Greater London.
On top of that, the council where the home sits can require a local connection (for example, that you live or work in the area) or give priority to key workers such as NHS staff, teachers and serving members of the armed forces. There is no single national application form. Each First Home is marketed individually by a developer or estate agent, and you apply through them.
The price caps
After the discount is applied, a First Home must cost no more than:
| Location | Maximum price after discount |
|---|---|
| Greater London | GBP 420,000 |
| Rest of England | GBP 250,000 |
Councils can set lower caps locally where it makes sense for their market. Because the cap bites on the discounted figure, the underlying open-market value can be higher than the cap before the discount is taken off.
What it costs to buy and run
The discounted price is the headline saving, but you should model the full cost of ownership before committing. The two figures that matter most are your monthly mortgage payment and your upfront Stamp Duty.
Because you are buying at a discount, your loan is smaller and your monthly payment is lower than for an equivalent open-market home. Run the discounted price through a mortgage calculator with a realistic interest rate and term to see what the monthly commitment looks like.
Mortgage Calculator
Calculate monthly mortgage payments, total interest, and full repayment cost.
Open Mortgage calculatorStamp Duty Land Tax is charged on the actual price you pay - the discounted figure - not the open-market value. That alone can drop you into a lower band or out of SDLT altogether, and first-time buyer relief may apply on top where the price is within the relief limits. SDLT thresholds are set nationally and change periodically, so do not budget from a half-remembered number. Confirm the current bands on gov.uk or run your discounted price through a calculator.
Stamp Duty Calculator
Calculate Stamp Duty Land Tax (SDLT) for your property purchase in England.
Open Stamp Duty calculatorSaving the deposit is the other half of the puzzle. With a lower purchase price, the cash deposit you need is smaller too. If you are still building your deposit, a Lifetime ISA can help - the government adds a 25 percent bonus of up to GBP 1,000 a year on contributions up to GBP 4,000, and the funds can be used towards a first home within the LISA property price limit. Check that the home's price sits within the LISA limit before relying on it, as that cap is set separately from the First Homes caps.
Savings Calculator
Project how your savings will grow over time with regular deposits and interest.
Open Savings calculatorFirst Homes versus shared ownership
These two schemes get muddled constantly, but they are structurally very different. The table below sets out the core distinction.
| Feature | First Homes | Shared ownership |
|---|---|---|
| What you own | 100 percent of the home | A share, often 25 to 75 percent |
| Rent | None | Rent on the share you do not own |
| Upfront cost | Discounted full price | Deposit on your share only |
| Resale rule | Sell at the same fixed discount | Sell your share, or staircase up first |
| Best for | Buyers who can afford the discounted full price | Buyers who need a smaller initial stake |
In short, First Homes gives you outright ownership at a reduced price with no rent, while shared ownership lowers the entry cost by selling you only a slice of the property and charging rent on the rest. Neither is universally better - it depends on how much you can afford upfront and whether you want full ownership from day one.
The resale catch, in detail
This is the part buyers underweight. With an ordinary home, if you buy for GBP 175,000 and the open market later values it at GBP 300,000, you sell for GBP 300,000 and capture the whole GBP 125,000 gain (subject to any tax). With a First Home carrying a 30 percent discount, you sell at GBP 210,000 - so your gain is GBP 35,000, not GBP 125,000. The discount permanently caps your upside.
That is by design. The scheme keeps homes affordable for a chain of future first-time buyers rather than handing each owner the full market gain. It is a genuinely good deal for getting onto the ladder and for keeping your monthly costs down, but it is not a vehicle for building maximum equity. If your priority is capturing the full open-market uplift over time, an unrestricted purchase will serve you better - if you can afford it.
When you do sell, the council or a nominated body usually has a set window to find an eligible buyer at the discounted price before you can market more widely. Build that timeline into any plans to move quickly.
How to apply, step by step
- Find a development advertising First Homes - they are marketed by developers and estate agents, not through a central portal.
- Check the local eligibility rules for that specific home, including any local-connection or key-worker priorities the council has set.
- Confirm the discount percentage and the final discounted price, and check it sits within the GBP 250,000 (or GBP 420,000 London) cap and any lower local cap.
- Get a mortgage agreement in principle, remembering you must fund at least half the price yourself - a broker who knows First Homes lenders saves time.
- Complete the purchase with a solicitor who understands the registered restriction, so you go in fully aware of the resale terms.
The bottom line
First Homes is one of the cleaner routes onto the property ladder in England for buyers who can manage the discounted full price: outright ownership, no rent, a smaller mortgage and a lighter Stamp Duty bill. The trade-off is a permanent cap on your resale value, so it rewards people who want a stable home over those chasing maximum capital gain.
Before you commit, run the real numbers. Model the monthly payment on the discounted price, check the current Stamp Duty bands on gov.uk, and confirm the income cap and price cap that apply to the specific home. Treat the rate-card figures here - the GBP 80,000 income cap, the GBP 250,000 and GBP 420,000 price caps, and the 30 percent minimum discount - as your fixed reference points, and verify everything local against the council's own published policy.
Frequently asked questions
What is the First Homes scheme?
First Homes is an English government scheme that lets eligible first-time buyers purchase a designated new-build home at a discount of at least 30 percent off its open-market value. The discount is permanent - it is registered against the property and passes on to every future buyer when the home is sold. It is aimed at local first-time buyers, key workers and people on lower incomes who would otherwise struggle to buy in their area.
How big is the First Homes discount?
The minimum discount is 30 percent off the open-market value, and some local councils set a higher discount of 40 or 50 percent in areas where housing is least affordable. So a home valued at GBP 250,000 with a 30 percent discount would cost GBP 175,000. The exact percentage depends on the local authority where the home is located, so always check the listing and the council's published policy before you commit.
Who is eligible for the First Homes scheme?
You must be at least 18, a first-time buyer, and able to get a mortgage for at least half the purchase price. Your combined household income must not exceed GBP 80,000 (GBP 90,000 in Greater London). Local councils can also add priority criteria such as a local connection or key-worker status. There is no single national waiting list - you apply through the developer or estate agent marketing each individual First Home.
Is there a price cap on First Homes?
Yes. After the discount is applied, a First Home must cost no more than GBP 250,000 (GBP 420,000 in Greater London). Councils can set lower local caps. Because the cap applies to the discounted price, the open-market value before discount can be higher. Always confirm the final price and the cap that applies in your area, as the figures are set nationally but enforced locally.
Can I get a mortgage on a First Home?
Yes, and you must fund at least half the purchase price with a mortgage or savings rather than other equity loans. Most major lenders offer mortgages on First Homes, though the choice is narrower than for open-market properties because of the resale restriction registered against the title. Speak to a broker early. Use a mortgage calculator to estimate monthly payments on the discounted price, which is usually far lower than an open-market equivalent.
What happens when I sell a First Home?
You must sell at the same percentage discount you received, so the home stays affordable for the next buyer. If you bought with a 30 percent discount, you sell at 30 percent below the future open-market value. The council or a nominated body has a period to find an eligible buyer. You keep any increase in value on your discounted share, but you do not capture the full open-market uplift the way an unrestricted owner would.
How is First Homes different from shared ownership?
With First Homes you own 100 percent of the property outright at a discounted price and pay no rent on any share. With shared ownership you buy a percentage - often 25 to 75 percent - and pay rent to a housing association on the rest, with the option to staircase up later. First Homes suits buyers who can afford the discounted full price; shared ownership suits those who need a smaller initial stake.
Do I pay Stamp Duty on a First Home?
Stamp Duty Land Tax is charged on the actual discounted price you pay, not the open-market value, which can reduce or eliminate the bill. First-time buyer relief may also apply where the price falls within the relief limits. SDLT bands change periodically, so do not rely on a figure you half-remember - check the current thresholds on gov.uk or run the discounted price through a stamp duty calculator before budgeting.
Can I rent out or use a First Home as a holiday let?
No. First Homes must be your only or main residence. You cannot buy one as a buy-to-let, a second home or a holiday let, and letting it out other than in narrow permitted circumstances breaches the terms registered against the property. The scheme exists to get people onto the ladder in the area where they live or work, not to create investment property.
Is the First Homes scheme available across the UK?
No - First Homes is an England-only scheme. Scotland, Wales and Northern Ireland run their own affordable-purchase and low-cost-ownership programmes with different rules, discounts and eligibility. If you live outside England, check your devolved government's housing pages for the equivalent support, as property tax and ownership schemes differ across the four nations.
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