The First Homes Scheme provides homes to first-time buyers at a substantial discount to market price. The minimum discount is 30%. This scheme is now the Government’s preferred home ownership option within Affordable Housing. The Government’s stated intention is that it should account for at least 25% of the Affordable Housing units being built. This link takes you to more detailed Guidance on this scheme: https://www.gov.uk/guidance/first-homes
When a First Home is sold on by its first owner, the original percentage discount has to be passed on to the new owner, based on the market price at the time of this sale. And the new owner must be another first-time buyer. This helps to ensure that the scheme continues to benefit first-time buyers, hopefully in perpetuity.
The initial pilot First Homes development was in Bolsover, Derbyshire. It launched in 2021. It is described in this useful document from the local council: https://www.local.gov.uk/sites/default/files/documents/Planning%20for%20First%20Homes%20-%20Experience%20from%20Bolsover.pdf.
Building societies and banks were initially wary of lending on First Homes, given that, if they were repossessed, they could then only be sold on at a considerable discount to market prices. Eventually, a compromise was reached. On repossession, these lenders would be allowed to sell on the open market at full market price. After receiving the outstanding loan back, the lenders then have to give the rest of the funds raised back to the Council. The details are contained in Section 8 of this Model S.106 Agreement for First Homes: https://www.gov.uk/government/publications/first-homes-model-section-106-agreement-for-developer-contributions/
Early in 2022, some Building Societies have publicised their willingness to provide mortgages for First Homes. See, for instance, these articles: https://www.mortgagestrategy.co.uk/news/halifax-debuts-first-homes-scheme-mortgages/
https://www.skipton.co.uk/mortgages/first-homes/
The Affordable Housing Provisions
If you need to know more about the Government’s Affordable Housing provisions, of which First Homes form a part, the first thing to realise is that there is no agreed definition of the term. The official definition is not entirely satisfactory. It is contained within the National Planning Policy Framework [NPPF], Annex 2, Glossary: “Housing for sale or rent, for those whose needs are not met by the market.” See Annex 2 of the NPPF for more detail:
The real importance of the Affordable Housing concept is that it forms the basis of obligations placed onto developers, as a condition of obtaining Planning Permission. Typically, these obligations are referred to as “Section 106 Obligations.” Most larger housing developments will obtain Planning Permission on the basis of an obligation to build a proportion of Affordable Housing units within the development. This can be a mix of homes for rent [eg. Social Housing, Affordable Housing] and homes for purchase [eg. First Homes, Shared Ownership]. Here is a link to the official guidance on Planning Obligations. https://www.gov.uk/guidance/planning-obligations.
There is also a good introduction to Affordable Housing produced by the House of Commons Library, https://commonslibrary.parliament.uk/research-briefings/cbp-7747/.
A Devolved Responsibility.
Note that, within the United Kingdom, housing is a devolved responsibility. So, the First Homes Scheme and the policy on Exception Sites apply so far only to England. However, as Cambridgeshire demonstrated before First Homes came into existence, the devolved administrations in Wales, Scotland and Northern Ireland could bring in similar discounted homes and exception sites policies, if they so chose. Or local councils in these nations could take the initiative themselves. Hopefully, as the England experience with these two new pieces of legislation grows, others in these other parts of the United Kingdom will follow suit.