Home ResidentialFirst-time buyers New builds to offer big markdowns for first-time buyers

New builds to offer big markdowns for first-time buyers

by LLP Editor
28th May 21 11:55 am

Developers will soon be expected to offer discounts of between 30 to 50 per cent on some of the new build homes they build for local first-time buyers on modest incomes.

Housing minister Christopher Pincher has said at least a quarter of developers’ contributions to affordable housing should include these types of discounted homes.

“Ensuring access to homeownership remains a key priority and challenge for this government. However, rising prices, high deposits and difficulty accessing mortgage finance still mean that far too many people are denied the opportunity to own a home of their own.”

In a ministerial announcement on Monday, Mr Pincher said first homes would meet the definition of affordable housing for planning purposes from 28 June 2021.

The National Federation of Builders, NFB, said the new rules would be relatively easy for the large housebuilders but would be more difficult for SME developers.

NFB housing and planning head Rico Wojtulewicz said: “It’s a hefty discount to find off build costs. It will be a challenge to deliver these homes for sale at a lower price.”

The first sale of a first home must be no more than £250,000, or £420,000 for greater London after the discount has applied. Buyers should have a combined household income of £80,000 or less, and in London £90,000 or below, to qualify.

This discount should be at least 30 per cent with local authorities able to set deeper minimum one of 40 or 50 per cent if they can prove this is needed. This reduction would be recognised in the title deeds ensuring it continued to be applied on the resale of the property.

LAs can decide who should benefit

Councils will have the flexibility to implement additional eligibility criteria, such as requiring a local connection or prioritising key workers. If the homes under local measures are not sold within three months then they will revert to the national standard criteria.

Brokers Hank Zarihs Associates said development finance lenders regarded first homes as offering a different option for builders to meet their affordable housing contributions.

The new requirement won’t apply to sites with full or outline planning permission in place or determined before 28 December 2021, or 28 March 2022 if there has been “significant pre-application engagement”.

First homes was first proposed by the government back in February last year and has received 3,200 responses.

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