First Homes Scheme Explained: Save 30–50% as a First-Time Buyer

The First Homes Scheme: A Complete Guide for First-Time Buyers

For many first-time buyers, getting onto the property ladder feels like an uphill battle. High prices, large deposit requirements, and strict affordability checks often place home ownership just out of reach. The First Homes scheme, available in England, was designed to help by offering eligible buyers a substantial discount — between 30% and 50% off the market value of a home. Unlike other schemes such as Shared Ownership, there is no rent to pay on the remaining share, making it a straightforward way to buy your first home at a reduced price.

The scheme applies to both new builds offered by developers and resales from people who originally bought their property under the same rules. Each home is independently valued by a surveyor to ensure the discount is based on true market value. Price caps apply: after the discount, the property cannot exceed £250,000 outside London or £420,000 in London, though local councils can set lower limits.

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Eligibility

To qualify, buyers must be at least 18 years old, a genuine first-time buyer, and able to secure a mortgage covering at least half of the purchase price. Income thresholds also apply: a maximum of £80,000 per year outside London or £90,000 in London based on the previous tax year. For joint purchases, these limits apply to combined household income. Local councils may also prioritise certain groups — such as key workers, existing local residents, or people on lower incomes — for the first three months a property is on sale. Members of the armed forces and their families are exempt from local restrictions but must still meet the national criteria.

Applying for a First Home

Applications are made through the developer (for new builds) or the estate agent (for resales). They will check your eligibility and submit your application to the local council. You may need to pay a reservation fee, usually refunded if your application is unsuccessful. A conveyancer must be appointed at this stage, and their details are required for the application.

Once submitted, the council reviews the application and communicates with your conveyancer, mortgage adviser, and the developer or seller. If approved, the council issues a certificate confirming you are eligible to buy. At this point, you arrange your mortgage — which must cover at least 50% of the purchase price — and prepare to exchange contracts. Be aware of fraud risks at this stage; scammers sometimes pose as conveyancers to intercept deposits, so always verify bank details before transferring funds.

Owning and Living in a First Home

Once you move in, the property becomes your only or main residence. You do not lose ownership rights if your income rises or your circumstances change later. If you fall behind on mortgage payments, however, lenders may still take legal action, including repossession. You may leave the home as an inheritance in your will, but any successor must follow the scheme rules.

Letting restrictions are important to note. Entire properties can only be let for up to two years in total during your ownership, unless exceptional circumstances apply, such as job relocation, redundancy, or family care responsibilities, and only with council permission. Renting out a single room while continuing to live in the property is allowed indefinitely.

Selling a First Home

When it comes to selling, the rules are designed to preserve affordability for future buyers. The property must be resold with the same percentage discount you originally received, based on its current market value. For example, if you bought with a 30% discount and your property is later valued at £200,000, you must sell it at a maximum of £140,000. Buyers must also meet the First Homes eligibility criteria, though local council restrictions only apply during the first three months the property is marketed.

If you cannot sell within six months, or if continuing to market the home under the scheme would cause severe hardship such as bankruptcy, you may apply to the council for permission to sell on the open market. In this case, however, the original discount must be repaid to the council. For instance, a buyer who purchased a home worth £250,000 for £175,000 after a 30% discount and later sells for £300,000 on the open market would have to return 30% of the sale price (£90,000) to the council.

Summary and Conclusion

The First Homes scheme offers a rare chance for first-time buyers in England to access properties at prices up to 50% below market value, helping to bridge the gap between aspiration and affordability. Eligibility depends on age, income, and mortgage capacity, with councils able to add local priorities. The scheme ensures long-term affordability by requiring discounted resale, while still giving buyers the full experience of home ownership without rent payments.

Key facts to remember:

• Discounts: 30–50% off market value.

• Price caps: £250,000 outside London, £420,000 in London.

• Income caps: £80,000 (£90,000 in London).

• Mortgage: must cover at least 50% of purchase price.

• Letting: up to 2 years total, with exceptions.

• Resale: same discount must be reapplied; open market sales require repaying the discount to the council.

For first-time buyers who meet the criteria, the scheme provides a clear and valuable route into home ownership. The catch is that long-term flexibility is limited — resale values are capped and letting restrictions apply. Still, for those eager to secure their first home at a lower price, it can be a powerful opportunity to turn the dream of ownership into reality.

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