The government has set out further details of the eligibility criteria and planning guidance for its First Homes Scheme, which will offer buyers a discount of between 30% and 50% on new properties from the end of June.
However, concerns have been raised that the scheme could have a negative impact on the supply of social rented homes.govgov
In a written ministerial statement yesterday, housing minister Christopher Pincher said that the homes would only be offered to those buying with a mortgage of at least 50% of the property’s value, in a bid to deter investors from taking advantage of the scheme.
The scheme will open from June 28 and borrowers with a joint household income of less than £80,000 (or £90,000 in London) who could not otherwise afford to buy will be able to apply.
Properties sold through the scheme must be priced no higher than £250,000 after the discount has been applied, or no higher than £420,000 in London.
Local authorities will be able to set higher discounts of 40% or 50% and set lower price caps if they can demonstrate a need to do so.
Critics have warned that the initiative could undermine the supply of social rented homes as the proposals require developers to set aside a quarter of the affordable housing they are obliged to create as discounted homes to be sold under this scheme.
This could reduce the share of homes given to housing associations to provide social rented options for the poorest families who are unable to buy, some argue.
However, in its statement, the government says it ”recognises the importance of social rent as part of the affordable housing tenure mix.
“A local authority should prioritise securing their policy requirements on social rent, once they have secured the 25% First Homes requirement. “Where other affordable housing units can be secured, these tenure-types should be secured in the relative proportions set out in the development plan.”
Propertymark chief executive Nathan Emerson says: “First Homes is a creative initiative and one that can really work because you are not just introducing more buyers, you are also giving them a home to buy.
“That is key because we have a very busy market right now, full of hungry buyers, and there is a danger that introducing more buyers without increasing supply could further push the supply and demand out of balance, meaning house prices would continue to rise.
“It’s clear that the UK government recognises the importance of homeownership, looking forward we want to see a further expansion of measures to support the market as a whole.
“Coupled with planning reforms to make building easier and create more homes, the UK government should now look to incorporate initiatives to encourage and support older generations to downsize and release family homes.”
Blackstock Consulting head of policy Joshua Carson says: “The government’s First Home scheme will eat into the provision of affordable rental housing, negatively impacting lowest income households to the benefit of people who would likely be able to afford to buy without a discount.
“Generations of poor decision-making following the introduction of Right to Buy have decimated social housing stock and the First Homes scheme will only compound this problem further.
“There needs to be a wholescale commitment to increase funding for social housing – not cannibalising what small amount of discounted rental and shared ownership housing we are currently delivering by taxing developers.”
