UK First Homes Scheme: Everything You Need to Know

How the First Homes Scheme Helps Single People Buy Their First Property

Buying a home of your own is tough in today’s economy, particularly if you’re a single person, with just one income. If you’re looking to purchase your very first property, the UK Government’s home buying schemes can be extremely useful.

Designed to help people of all ages and backgrounds climb onto the property ladder, these schemes can improve accessibility to the housing market. The only problem? The schemes available are constantly changing and they all come with their own eligibility criteria and restrictions to consider.

Now that the “Help to Buy” equity loan, allowing purchasers to buy a home with a deposit of only 5% is no longer available, you may need to consider some alternatives. Fortunately, the “UK First Homes Scheme” could still offer the support you need. Here’s everything you need to know.

What is the UK First Homes Scheme?

Back in 2013, the UK government launched the famous “Help to Buy” equity loan scheme, helping to drive the purchase of more than 350,000 properties nationwide. This scheme allowed purchasers to buy a home with an only 5% deposit. Unfortunately, this scheme was officially closed in March 2023.

So, how do you afford to buy your own property, particularly when the average cost of a house is around £264,400 in 2024, making the cost of a 20% deposit a whopping £52,000

The good news is that the UK Government still offers ways for new buyers to enter the property market, starting with the “First Homes Scheme”.

The First Homes Scheme allows eligible buyers to purchase a home for up to 50% less than its market value. Your home can be a new property (built by a developer) or a home purchased through an estate agent which was also previously purchased using the scheme.

Properties eligible for this scheme are advertised by estate agents and developers through the First Homes policy, and unlike shared ownership, there’s no rent to pay with this scheme. You’re not buying a portion of a house – you’re getting the whole thing for a lower price.

The First Homes Scheme: Eligibility Requirements

Unsurprisingly, there are a lot of rules connected to the First Homes Scheme. First, you need to be at least 18 or older, and a first-time buyer. You also need to show that you can get a mortgage for at least half the price of the property. Plus, you can’t earn more than £80,000 per year before tax (or £90,000 if you’re based in London). This probably won’t be much of an issue for us single people.

Every home sold needs to be valued by an independent surveyor (to validate the discount), and the home can’t cost more than £250,000 (or £420,000 in London). Notably, this scheme is only available in England, so you’ll need to investigate alternative options if you’re based in Scotland, Ireland, or Wales.

Plus, each local council can set their own eligibility criteria. Some councils might prioritise giving discounts to people who already live in the area, those on lower incomes, and key workers. There are also “exemptions” for local eligibility criteria. For instance, you might not have to live in the area or be a keyworker, if you’re a member of the armed forces, a veteran, or have a former partner in the armed forces.

Fortunately, single people are eligible, and you can even buy a First Homes property with a friend or relative (provided your combined income doesn’t exceed the cap, and you’re all first-time buyers).

How to Apply for the First Homes Scheme

The UK Government website has a fantastic online resource you can find here to guide you through the process of applying for the First Homes Scheme. Generally, however, the process is straightforward, you’ll need to:

• Contact your developer (or estate agent): Contact whoever you’re getting the home from (estate agent or developer) and tell them you want to buy the property using the First Homes Scheme. They’ll check you meet the local eligibility criteria, and help you apply to your local council. Notably, you might have to pay a reservation fee (which you’ll get back if you don’t buy the house), and you may have access to incentives such as cash back or free goods.
• Find a conveyancer: Next, you’ll need a conveyancer to check the value of your home and make sure you’re getting the right deal. You can find conveyances on the Law Society website, or website for licenced conveyancers. There may be legal fees here which you’ll be responsible for paying, so keep this in mind when planning your budget.
• Get a mortgage: If you’re approved for your First Home Schemes application, you’ll need a mortgage which accounts for at least half of the purchasing price of the property. You can work with your real estate agent or find a mortgage broker to help you with this.

Once everything’s done, your local council will check your application, contact your developer (or estate agent) and your mortgage advisor and conveyancer for you. Then, all that’s left to do is complete any legal documents you need for your home.

When Your First Homes Application is Approved

If you’re approved for the First Homes Scheme, your council will award you a handy certificate confirming your eligibility. From then, the process of getting your home is pretty similar to getting any mortgage. You’ll need to pay a deposit (and exchange contracts with your seller or developer).

Remember, once you exchange contracts and pay your deposit, you’ll be legally obligated to purchase the property, so make sure you’re not going to change your mind. After you exchange contracts, your developer or real estate agent will set a completion date for the purchase.

On the completion data, any remaining money needed to buy the property will be transferred to the seller’s solicitor, and you’ll be given the keys so you can move in. Keep in mind, you may also need to pay stamp duty, and the fee will depend on how much you paid for your property after the discount was applied.

Owning a First Homes Property

After you’ve officially bought the home (congratulations!), you don’t have to meet the First Homes eligibility criteria anymore. This means if your income increases, or your situation evolves, you won’t have to sell your home or move out.

However, you’ll still need to be a reliable homeowner, which means paying your mortgage fees (on time), to avoid any legal action. The good news is you can treat your home like any other property. You can still leave your home to someone in your will, although they’ll need to follow the “First Homes” rules, outlined here, and use the property as their main residence.

Renting or Letting your Home

Rules for letting your property are a little different. For instance, you can usually only let the home for 2 years in total during the time you own it, and you’ll need to get permission from both your local council, and your mortgage lender.

There are exceptions to this rule, however. For instance, you might be able to let your home for longer if your job’s location changes, you need to escape domestic abuse, or a long-term relationship you’re in ends. You might also get extra support if you’re made redundant, or you need to move to care for a friend or relative.

Letting out a room is much simpler, as you can rent a room to someone for as long as you like, provided that your property is still your main or only resident.

Selling Your Home

If you want to sell your property, you’ll need to ensure you’re selling to someone eligible to buy a first home. You also need to give the buyer the same percentage discount you got, based on your home’s current value, which means working with a surveyor again. If you want to sell your home at full price on the open market, you can ask your council for permission.

Your request will usually only be considered if you’ll suffer severe financial difficulties (like bankruptcy) if you sell at a discount, or if you’ve been unable to sell your home for six months or more through the First Homes scheme.

The council may offer to buy your home for the discounted price, ask you to continue trying to sell it through the scheme (for another six months) or allow you to sell on the open market. If you do sell on the open market, you might need to return the percentage discount you got to the council. For instance, if you bought your property, worth £250,000 for £175,000 with a 30% discount, and you sell it for £300,000, you’ll owe the council £90,000.