Starter Homes scheme
What is the Starter Homes scheme and who is eligible?
Buying a home with the Help to Buy or shared ownership schemes may not always be possible due to eligibility or affordability criteria. Recognising it, and also to help revive areas which were previously used for commercial or industrial purposes, the government introduced the Starter Homes scheme.
This scheme is exclusive to first time buyers aged between 23 and 40 and whose household income is no more than £80,000 per year outside London or £90,000 per year in London.
Important Starter Homes criteria
The new-build properties available under the Starter Homes scheme have a maximum purchase price of £250,000 outside London or £400,000 in London. This purchase price is at least 20% below the market value of the property.
In addition, the buyer has to take a residential mortgage on the property. In other words, the Starter Homes scheme does not support cash buyers.
Sustainability of the Starter Homes scheme
Local authorities have been working together with developers to identify suitable so-called “brownfield” plots. These are sites that have been or are currently used for commercial or industrial purposes, and as such have not previously been considered for residential development. This move also eases the pressure to build on previously untouched “greenfield” sites in order to develop new homes.
So what’s next?
If you are looking to take advantage of the scheme, but cannot find many properties available, this is likely because the scheme is relatively new. Participating local authorities only started developing Starter Homes in 2017.
30 councils were initially selected to introduce the scheme. Eventually, more councils will be joining the scheme, and as a result, more Starter Homes will become available over the coming years. In the meantime, these are the first participating local authorities: 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 Kesteven, South Ribble, South Somerset, Stoke-on-Trent, West Somerset and Worthing.
You will need to do some research if you are interested in buying a new home at least 20% below the market price. First, check availability with your local council or with the developer of a newly built site to see if they participate in the Starter Home scheme. Alternatively, you can register your interest on the New Homes website https://www.ownyourhome.gov.uk/scheme/starter-homes/ to receive updates and information about new developments.