The Starter Home scheme explained

Government scheme will offer new homes at a discount to first-time buyers. Find out where the starter homes are being built and whether you're eligible.

What is it?

The Starter Home scheme is a Government initiative to build 200,000 new homes for first-time buyers in England.

Under the scheme, a 20% discount will be available on homes up to £250,000 outside London and £450,000 in London. 

The Government says that first-time buyers pay an average of £218,000 for a home, so they’ll save an average of £43,000 under the scheme.

How it works

The new homes will be built on brownfield land (underused or unviable commercial or industrial sites) and sold at least 20% below the market rate.

Normally builders face Section 106 contributions, which require affordable houses to be included in building schemes or a payment to be made to the local council. Section 106 obligations typically add £15,000 to each new home build. However, this will be waived as part of scheme. 

The homes are required to stay at 20% below market value for the first five years after the build. Just remember that means you wouldn’t be able to sell it at full market value if you move out before the initial five years is up. It can’t be let out at the market rate, either. If you think you’ll live in it for less than the initial period, you might be better off with Help to Buy.

The Government says that homes will be well-proportioned, high quality and exempt from the zero carbon standard placed on other new builds. 

When and where will the homes be built?

Construction of the starter homes will begin this year and 30 local authorities have been selected to be part of the scheme so far.

The 30 councils include: Blackburn, Blackpool, Bristol, Central Bedfordshire, Cheshire West and Chester, Chesterfield, Chichester, Lincoln, Ebbsfleet, Fareham, Gloucester, Greater Manchester, Lincolnshire, Liverpool, Luton, Mid Sussex, Middlesbrough, North Somerset, Northumberland, Pendle, Plymouth, Rotherham, Rushmoor, Sheffield, South Kestevan, South Ribble, South Somerset, Stoke-on-Trent, West Somerset and Worthing. 

Eligibility

If you’re under 40 and have never bought a home before, you qualify for the Starter Home scheme.

As for the mortgage, it’s unclear whether there will be a specific offer designed for the scheme available from banks and building societies. They may just decide to give you an open choice from their existing ranges.

And of course, how much you earn, your outgoings and your credit record will still be reviewed when you’re being considered for a mortgage.

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More information

You can register at the Starter Home website for information on new projects in your area.