Agents and mortgage brokers remain unsure how the government’s flagship First Homes scheme will work when owners sell up their discounted start homes a few years down the line.
The scheme, which was launched by Boris Johnson in early June this year, enables first time buyers and key workers to purchase newbuild properties in England at a 30% discount to the market value, and is the government’s answer to the challenges faced by many young people getting on the property ladder who want to stay in their home town or area, or keyworkers live near to their job..
A restriction will be registered on the title of each property at the Land Registry to ensure this discount as a percentage of current market value and certain other restrictions are passed on at each subsequent title transfer.
What’s not clear is how these homes will be sold in the future, and how the discount will be transferred.
The biggest issue is whether estate agents will be able to market and sell these properties, or whether councils will allocate them to ‘local people’ via a waiting list.
There are also question over how mortgage lenders will calculate affordability.
“The housing ministry people don’t seem to have thought it through,” says Paul Mahoney, MD of Nova Financial Group.
“In my opinion, it is always a mistake to try and manipulate the open market.
“We live in a free market, capitalist society so to try to falsely change the price of a property is always going to be fraught with issues. Will these buildings have a stigma attached to them on resale?”.
The industry appears not to know either. The Neg asked Ellis & Co, which is one of the few estate agents to have a page on its website about the scheme, how First Homes resales will work, but it declined to comment.
And the housing ministry has so far been unable to answer questions on First Homes, despite its latest First Homes site going live last week, at a Keepmoat Homes development in Newton Aycliffe, County Durham. Robert Jenrick (pictured, main image) says the government hopes to have 60,000 First Home up and running by the end of the decade.