The First Homes Scheme represents a significant opportunity for first-time buyers across the UK to enter the property market at a reduced cost.
At its core, the scheme offers a discount on new build properties, typically ranging from 30% to 50%, depending on your local authority area and regional affordability policies.
For many UK homebuyers, this discount can equate to savings of tens of thousands of pounds—making homeownership achievable where it previously seemed out of reach.
But understanding how the discount is calculated and what it means for your purchase is crucial before you commit to a property.
This guide focuses on the practical mechanics of the First Homes discount, helping you navigate eligibility, valuation processes, and the real financial benefits you’ll receive.
Key Takeaways
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Save 30%-50% Off Market Price: The scheme lets first-time buyers purchase new builds at a steep discount, making it one of the most impactful affordable housing initiatives in England today.gov
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Helps Over 53,000 Buyers Annually: Recent stats show that tens of thousands of first-time buyers benefit yearly, with government-backed mortgage guarantees supporting homeownership access.hoa
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Lower Deposit and Mortgage Needed: Because the purchase price is discounted, buyers can secure mortgages easier and need smaller deposits, even in high-demand regions like London or the South East.feesfreemortgages
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Tailored by Local Councils: Price caps and discount percentages vary by regional authority to match local housing markets — ensuring fairness and maximizing affordability.liftforhome
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Permanent Affordability: When owners sell their First Homes, the discount passes to the next eligible buyer, preserving affordable homeownership for generations.countrysidehomes
How is First Homes Discount Calculated?
The calculation is straightforward, yet nuanced. The First Homes discount is applied to the market value of a property, not an arbitrary base price. Here’s how it works:
Step 1: Establish Market Value
The developer or local authority determines the full market value of the property. This valuation is independent of the First Homes Scheme and reflects what the property would sell for on the open market.
For example, if a new build house in your area would normally sell for £300,000, this becomes your baseline figure.
Step 2: Apply the Discount Percentage
Depending on your location and local authority rules, a discount of either 30% or 50% is applied to this market value.
Some areas operate a tiered system where the discount percentage varies by location or buyer profile (such as key worker schemes, which may offer enhanced discounts).
For a 30% discount on a £300,000 property:
- Discount amount: £90,000
- Your purchase price: £210,000
For a 50% discount on the same property:
- Discount amount: £150,000
- Your purchase price: £150,000
Step 3: Apply Price Caps
Many regions, particularly London and the South East, enforce maximum price caps. These caps ensure the scheme remains truly affordable.
For example, in some London boroughs, the maximum price for a First Homes property may be capped at £600,000, regardless of market value.
This protects the affordability intent of the scheme while ensuring developers participate.
Regional Variations: Understanding Local Authority Rules
One of the most critical aspects of the First Homes discount is that it varies by location. Each local authority has discretion over how the scheme operates within its boundaries, subject to government guidelines.
London Price Caps
London boroughs typically enforce strict price caps, often between £400,000 and £625,000 (depending on the borough).
This means that even if a property’s market value exceeds the cap, your purchase price is capped at this level, maximising your discount and affordability.
Regional Variations
Outside London, discounts and price structures differ.
Northern regions may offer lower price caps but consistent discount percentages, while the South West might prioritise the 30% discount model to maintain developer viability.
Always check your local authority’s specific First Homes policy before assuming discount rates.
Key Worker Eligibility
Some areas reserve a proportion of First Homes for key workers (NHS staff, teachers, police, etc.), often with enhanced discounts or relaxed eligibility criteria.
If you work in a priority sector, you may access better discount rates or priority availability.
Practical Example: First Homes Discount Calculation in Action
Let’s walk through a realistic scenario to demonstrate the full First Homes discount process.
Scenario: You’re a first-time buyer in Greater Manchester, looking at a new build property.
- Market value of property: £250,000
- Local authority discount: 30%
- Local price cap: £350,000 (not exceeded)
Calculation:
- Market value: £250,000
- Discount at 30%: £75,000
- Your purchase price: £175,000
- Your savings: £75,000
This £75,000 discount can be reinvested in your home, used for moving costs, or left as additional equity—providing genuine financial relief for first-time buyers.
Eligibility Requirements for First Homes Discount Access
Understanding discount rates is only half the equation. You must also meet eligibility criteria:
First-Time Buyer Status
You must not have owned a property in the UK or overseas in the past two years. Some schemes allow exceptions for buyers who previously owned but have since sold due to divorce or financial hardship.
Age Requirement
Most areas require applicants to be under 40 years old, though some regions offer flexibility for older buyers or remove age restrictions altogether.
Income Thresholds
Household income must typically fall below £80,000 (or £90,000 in London), though this varies by local authority. Dual-income households are assessed on combined income.
Residency and Local Connection
Many schemes prioritise local residents or those with connections to the area. However, this is increasingly relaxed as schemes aim to broaden accessibility.
Mortgage Approval
You must obtain a residential mortgage to purchase under the scheme. Lenders must approve you for the discounted purchase price, not the original market value.
The Resale Implications: What Happens When You Sell?
A critical question for First Homes buyers concerns resale: Will you keep the discount when you sell?
The answer is partially yes. First Homes properties are subject to a covenant or restriction that requires:
- Re-marketing Priority: When you eventually sell, the property must first be offered to eligible First Homes buyers for 8 weeks at a discounted price (typically 25% below market value).
- Affordable Housing Obligation: If no First Homes buyer emerges, the property reverts to open market sale, but you retain your equity and profit normally.
This structure ensures the scheme’s long-term affordability impact while allowing you to benefit from any property appreciation over time.
Common Misconceptions About First Homes Discount
Misconception 1: “The discount applies to my mortgage amount.”
Reality: Your mortgage is calculated on your actual purchase price (after discount), not the market value.
This is a significant advantage—lower loan amounts mean lower monthly payments and reduced interest.
Misconception 2: “I lose the discount if I sell.”
Reality: You keep your discount and equity. The affordability mechanism applies to future buyers through resale covenants, not to you.
Misconception 3: “All areas offer 50% discount.”
Reality: Discounts vary by location. Always verify your local authority’s specific offer before assuming rates.
Next Steps: Accessing Your First Homes Discount
If you’re a first-time buyer under 40 with household income below £80,000 (£90,000 in London), the First Homes Scheme discount could save you tens of thousands of pounds.
Action Steps:
- Check your local authority’s First Homes policy and price caps.
- Identify eligible new build properties in your preferred area.
- Confirm your eligibility (first-time buyer status, age, income).
- Contact developers participating in the scheme.
- Seek mortgage pre-approval to understand your borrowing capacity post-discount.
Conclusion
The First Homes Scheme discount represents genuine financial relief for UK first-time buyers entering an increasingly expensive property market.
By understanding how discounts are calculated, recognising regional variations, and meeting eligibility criteria, you can make an informed decision about whether this affordable homes scheme aligns with your property purchase goals.
Whether you’re facing a 30% or 50% discount, the savings can provide the stepping stone you need to achieve homeownership.
Here is a comprehensive resources list with links to primary sources and key government and advisory websites referenced in your First Homes Scheme discount article for the UK:
Resources & References
- GOV.UK — Official First Homes Scheme Overview and Buyer’s Guidegov+3
- Henry Dannell — Scheme Explained for 2025henrydannell
- Lucra Mortgages — 30% Discount Detailslucramortgages
- David Wilson Homes — First Homes Scheme Informationdwh+1
- Countryside Homes — First-Time Buyer Government Schemecountrysidehomes
- Extend Finance — Eligibility and Application Processextendfinance
- Guinness Homes — How the Scheme Worksguinnesshomes
- Linden Homes — First Homes for First Time Buyerslindenhomes
- Bovis Homes — Scheme Details and Benefitsbovishomes
- OneFamily — Lifetime ISA and First Homesonefamily
- Eden Hawk — Benefits of Buying a New Build Homeedenhawk
- HomeOwners Alliance — First Time Buyer Schemes (2025)hoa
- Reddit r/HousingUK — Real Buyer Insightsreddit
- Highlight Scotland — Regional Council Ruleshighlight
- Friends Capital — Affordable Housing Eligibilityfriendscapital
- Taylor Wimpey — Scheme Summarytaylorwimpey
- Fees Free Mortgages — Government Schemes Roundupfeesfreemortgages
- Liftforhome.in — Council Price Caps and Variationsliftforhome
These resources provide official guidance on scheme eligibility, discount calculation, regional price caps, special buyer groups, and step-by-step purchasing help. All cited data, examples, local rules, and insightsgov+21
- https://www.gov.uk/first-homes-scheme
- https://www.gov.uk/first-homes-scheme/how-the-scheme-works
- https://www.gov.uk/guidance/first-homes
- https://assets.publishing.service.gov.uk/media/5e3d4521e5274a08deb46b8f/Guide_to_First_Homes.pdf
- https://henrydannell.co.uk/education-hub/blogs/first-homes-scheme-explained
- https://lucramortgages.co.uk/guides/getting-you-on-the-property-ladder/
- https://www.dwh.co.uk/offers/first-homes/
- https://www.dwh.co.uk/advice-and-inspiration/top-government-schemes-first-time-buyers/
- https://www.countrysidehomes.com/ways-to-move/first-homes
- https://extendfinance.co.uk/what-is-first-homes-scheme/
- https://www.guinnesshomes.co.uk/blog/buying-guides/first-homes-scheme-explained/
- https://www.lindenhomes.co.uk/ways-to-move/first-homes
- https://www.bovishomes.co.uk/ways-to-move/first-homes
- https://www.onefamily.com/lifetime-isa/first-time-buyers/what-is-the-first-homes-scheme/
- https://www.edenhawk.co.uk/the-benefits-of-buying-a-new-build-home-for-first-time-buyers/
- https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/government-schemes-help-buy-home/
- https://www.reddit.com/r/HousingUK/comments/1mo3gii/first_homes_scheme/
- https://www.highlight.scot/introduction-to-the-uk-first-homes-scheme-how-it-works-and-its-benefits/
- https://www.friendscapital.co.uk/blog/understanding-the-starter-home-scheme-affordable-housing-for-first-time-buyers-under-40
- https://www.taylorwimpey.co.uk/ways-to-buy/first-homes-scheme
- https://feesfreemortgages.co.uk/best-government-schemes-for-first-time-buyers-in-2025/
- https://liftforhome.in/first-home-scheme-uk/