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First Homes value caps must be reduced in North to help those frozen out of housing market, says Savills

Ministers may need to lower value caps on its First Homes scheme to help buyers in the North and Midlands get a foot on the housing ladder, according to research by Savills.

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The government may need to lower value caps on its First Homes scheme to help buyers in the North and Midlands get a foot on the housing ladder, according to research by Savills #UKhousing

The consultancy said that take-up of the First Homes scheme, which will offer first-time buyers in England discounts between 30% to 50%, will vary significantly across the country depending on value and income caps.

Homes qualifying for the scheme are capped at values of £420,000 in London and £250,000 for the rest of England.

But Savills claimed that local authorities in the Midlands and North will need lower value caps to target households truly frozen out of the housing market and who cannot raise enough for a deposit.

It also said that in London and parts of the South East, where house prices are much higher, the value and income caps could prove a “major constraint” and put pressure on the ability to meet recommended space standards.

In Kensington and Chelsea, City of London and Westminster, for example, even a 50% discount may not make the product affordable, according to Savills.


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The analysis also noted that bigger discounts required in higher-value markets of London and the South East mean it will be less economical for house builders to deliver First Homes.

In August the government proposed making 25% of all affordable housing funded through Section 106 planning agreements earmarked for First Homes.

It will also run a 1,500-unit First Homes pilot as part of the next Affordable Homes Programme.

However, a top civil servant said last week that “targets and dates” will not be set for the initiative due to the level of uncertainty in the market and the scheme’s dependence on private housebuilding.

Lucian Cook, head of UK residential research at Savills, said: “Local authorities, housing associations and house builders will need to understand the economics of the scheme, but that’s not as straightforward as it sounds.

“Differing discounts will be required across the country in order to deliver a range of housing to meet the increasingly diverse needs of today’s first-time buyers.

“That looks like it will be difficult in the more expensive parts of London and the South East, while some councils in the Midlands and the North will want to lower the value caps set by the government in order to target property at buyers who are truly frozen out of the housing market.”

Housing associations and councils have previously raised concerns that the scheme, drawn up by housing secretary Robert Jenrick, could make it more difficult to provide homes for lower-income families.

Savills said it expects the policy to open up homeownership to less affluent households than Help to Buy and development values will sit between shared ownership and affordable rent.

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