Low-income workers in England will be able to apply for a discount of up to 50% on a new-build home under a new affordable housing pledge due to launch next month. First Homes, as it's known, will launch on June 28 - exactly one year after being confirmed by Prime Minister Boris Johnson. Under it, first-time buyers will be able to get at least 30% off a new house - and in some cases a half price reduction.
It will see private developers ring-fence 25% of their properties for buyers who qualify for the discount. The scheme will be available to people who are trying to buy a home in the area they grew up, work or currently live in - but are unable to do so because of rising house prices. It is estimated that it could save struggling buyers an average of GBP100,000 off their home.
The government has been consulting on exactly what the First Homes scheme will look like for over a year - and has now revealed its final plans. Here's everything we know about how it will operate.
What is the First Homes scheme?(C) Getty Images The scheme will be reserved for first-time buyers only
First Homes is the government's latest affordable housing promise and will offer reduced properties to first-time buyers purchasing new-build flats or houses in an area connected to them - such as the place they work. Under the scheme, buyers will be able to get on the ladder for at least 30% less than market value, and potentially up to 50% off in some cases.
The minimum discount eligible Brits will get off their homes will be 30%. However, the government has now announced it's possible that the discount could be as high as 50% off. That is because local authorities will have the discretion over the size of the discount - this will be considered on a case-by-case basis.
Who can apply for a First Homes discounted house?
The scheme is only for first-time buyers - and will not apply in Wales or Scotland, the government has confirmed.
And to reserve it for those that need it most, it won't apply if your combined household income is over GBP80,000, or GBP90,000 if you live in London. If you can afford to buy one of the homes with the discount and your savings, you also won't qualify. Buyers must use a mortgage for at least 50% of the price of the discounted home.
Local authorities will also have the flexibility over who qualifies for the first three months. For example, some authorities may give key workers or people who pass the 'local connection' test, first dibs. Local connections may include (but are not limited to) current residency, employment requirements, family connections or special circumstances, such as caring responsibilities.
After three months of the home going on sale, extra conditions set by the local authority will be removed for any First Homes which haven't been sold or reserved.
Will there be a cap on house prices?
There will be a cap on the price of First Home properties, meaning after the discount has been applied, you won't be paying more than GBP250,000, or GBP420,000 if you live in London. But this price cap could be even lower, depending on whether your local authority chooses to lower it.
When will it launch?(C) Getty Images It will also only apply on new build homes
The scheme will launch on June 28, 2021. However many of the homes are still in development, meaning they are unlikely to be ready before next year when you can move in.
How do I apply?
Unlike Help to Buy, there will be no formal registration for the First Homes scheme.
Instead, hopeful buyers will need to do their own research to find the developers taking part and then apply directly through the company. Buyers can use the official Help to Buy website as well as property websites such as Zoopla and Rightmove to help locate new developments in their chosen area. Some of these will host first-time buyer events and open days where you can enquire and place offers on newly-built and in development properties.
There's also no deadline to hit to apply for a First Home - it all depends on the development and when the property is ready to be moved into.
You'll have to sell it for the discount you purchased it for(C) Getty Images The discount will have to be passed on
There's one important small print rule buyers need to be aware of. When it comes to selling up, you probably won't make any huge gains relative to fluctuations in the housing market because it will have to be sold to someone (a first-time buyer) who is also on the first-homes scheme. The idea is that this will help circulate affordable homes amongst the group that need it most.
But it means you'll need to sell it with the same discount you bought it for. For example, if you bought it for 30% off market value, you'll also need to sell it for 30% off what it is now worth. However, the sale will not be subject to the same GBP250,000 (and GBP450,000) price caps in London.
Crucially, that also means there is a risk that if the property value goes down, you could end up selling it for less than what you bought it for.
Propertymark, which oversees estate agents, said the scheme is a "creative initiative" and one that could "really work" but warned it could send house prices rising even further.
Chief executive Nathan Emerson, said: "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," the company said.