The First Homes scheme allows first-time buyers to purchase a new home at a significant discount, but this discount is always worked out against a valuation by an independent RICS registered valuer. This valuation sets the true market price when you first buy the property, and it dictates the price again at every future resale. Understanding how the valuation works is the key to knowing what you will pay now and what you can sell for later.
What the First Homes scheme is
The First Homes scheme allows eligible buyers to purchase a home for less than its market value. Councils can set local criteria, such as prioritising people who already live in the area, and the process relies on independent professional valuations. The rules in this guide follow GOV.UK pages and RICS guidance for valuers. The GOV.UK pages include planning guidance last updated on 23 December 2021 and local authority guidance published on 15 February 2024. Some other GOV.UK pages show no date, so check GOV.UK for the current wording.
Availability depends on the area and your local council. New homes built under this initiative are not guaranteed to exist locally, and you should always check GOV.UK and your local council for the current position. You must not assume that a suitable property will be available or that a specific financial saving is certain. If a property is available, the discount is applied to the market value, which is set by an independent valuation rather than by the developer's asking price.
How the discount works
The GOV.UK overview says you may be able to buy a home for 30 per cent to 50 per cent less than its market value. The planning guidance says the first sale must be discounted by a minimum of 30 per cent against the market value, and that local authorities may require a 40 per cent or 50 per cent discount if they can demonstrate need. The discount on a particular home depends on the council, so check with them.
This discount stays attached to the property in perpetuity. This means the percentage reduction does not just apply to your purchase. When you eventually sell the property, the next buyer will receive the exact same percentage discount off the market value at that time.
The table below shows the headline figures and limits for the initiative.
|
Requirement |
Figure GOV.UK gives |
|---|---|
|
Minimum discount |
30 per cent |
|
Discount a council may require |
40 or 50 per cent |
|
Household income cap outside London |
£80,000 a year before tax |
|
Household income cap in London |
£90,000 a year before tax |
|
Mortgage or home purchase plan you must be able to get |
At least 50 per cent of the discounted price |
These are the figures GOV.UK gives. Councils can set their own local criteria and lower price caps, so check the position with your council.
To see what a given discount does to a price, and the smallest mortgage you would need, use the First Homes calculator, which uses the GOV.UK figures above.
Price caps after the discount
The scheme sets price caps. A new build property sold under this initiative cannot cost more than £250,000 after the discount is applied. If the property is in Greater London, the maximum price after the discount is £420,000.
These caps apply only to the first sale of the newly built property. Local authorities have the power to set lower price caps for their specific areas, so the maximum price in your town might be lower than the national limit. Because the cap applies after the discount, the initial market value before the reduction can be significantly higher.
Who can buy a First Home
The initiative is aimed at people trying to get onto the property ladder, so you must be 18 or older and a first-time buyer. The definition of a first-time buyer is the same one used for Stamp Duty Relief. If you are buying jointly, all purchasers must be first-time buyers and you must apply together.
There are strict limits on what you can earn. Your household income cannot be more than £80,000 a year before tax in the tax year before purchase. If the property is in London, this limit rises to £90,000 a year before tax. You must also be able to get a mortgage or home purchase plan for at least half the discounted price of the home. The property must be your only or main residence.
Councils may set their own local criteria for the first three months that a property is on sale. They might prioritise:
- Key workers in the area.
- People who already live in the area.
- Buyers on lower incomes.
These local criteria only apply for the first three months that a property is on sale. GOV.UK words this period slightly differently on different pages, including that local criteria stop applying once a home has been on the market for more than three months, so check exactly how it works with the council. Armed forces members, certain former spouses or civil partners, widows or widowers of service members, and veterans who left in the last five years do not need to be key workers or live in the area.
Why the valuation matters
The entire initiative rests on an independent valuation. GOV.UK says each home is valued by an independent surveyor so that the discount reflects actual market value. At the first sale, the developer obtains the initial valuation from a registered valuer acting in an independent capacity.
Your mortgage lender will also carry out their own check to ensure the property is worth the money they are lending you. If your lender decides the property is worth less than the agreed price, their lower figure matters. If the mortgage valuation comes in low, the lender's figure after the discount acts as a price cap.
What the valuer does
The independent valuer provides a professional opinion of the market value. They follow RICS Red Book guidance for new-build homes, and RICS has published a valuation guide for surveyors on First Homes. The final sale price is determined by applying the agreed percentage discount to this independent opinion of market value.
To reach this figure, the valuer looks at comparable properties. The valuer reviews incentives offered on other new build properties and includes them in the list of comparables. The aim is that a First Home valuation is not influenced by incentives that affect comparable properties but are not relevant to the First Home.
The discount does not extend to ground rent or service charges for leasehold properties.
Selling a First Home later
When you decide to move, you must offer the next buyer the exact same percentage discount you received. This discount is based on the market value at the time of sale, not the price you originally paid. You must first tell the council and appoint an estate agent experienced in the scheme.
On a resale the owner pays for the valuation. You must secure a valuation from a valuer qualified by the Royal Institution of Chartered Surveyors. The RICS surveyor values the home at its 100 per cent market value before the discount is applied.
The maximum price you can ask is the surveyor's valuation minus your original percentage discount. For example, if the surveyor provides a £200,000 valuation and your property carries a 30 per cent discount, your maximum sale price is £140,000. You can sell for less than this maximum, but you cannot sell for more. Price caps do not apply to resales, and the new buyers must also be eligible for the initiative. Local criteria stop applying after the property has been on the market for more than three months.
If you cannot sell the property under the initiative, you can ask the council for permission to sell on the open market. You can request this open market route if:
- You have tried unsuccessfully to sell under the rules for six months or more.
- Selling under the rules would cause severe difficulties, such as bankruptcy.
If the council approves an open market sale, you must return the same percentage of the final sale price to the local authority. For example, if you sell on the open market for £300,000 and your property carried a 30 per cent discount, you must return £90,000 to the council. You can read more about these rules on the government page for selling the property.
Letting and improving your home
Once you have bought the property, you no longer have to meet the eligibility criteria. This means a rise in your income does not mean you must sell the home. You can decorate or improve your property.
However, letting or selling the property triggers specific rules. Letting the whole property is usually allowed for no more than two years in total during your ownership. You must tell the council and check with your mortgage lender before you arrange a tenancy.
Longer lets may be allowed in certain circumstances with council permission. Examples given include redundancy or caring for a relative. You can rent a room to a lodger for as long as you like, provided the home stays your only or main residence and you continue to live there. Further details are available on the government page for owning the property.
Is the scheme available near you
Availability depends on the area and the council. Start by checking GOV.UK and your local council's website to see whether First Homes are offered near you and what local criteria apply.
You must also speak to a conveyancer. A conveyancer handles the legal transfer of the property and can explain what the discount rules mean for your purchase. Never rely on informal advice regarding contracts or property titles, and always point these questions to a qualified conveyancer or solicitor.
Finally, speak to your mortgage lender or broker. You must be able to get a mortgage or home purchase plan for at least half the discounted price of the home, and checking early can help you avoid delays later in the process.
Find a surveyor near you
A valuation tells you what the property is worth, but it does not tell you what condition it is in. You may want a separate condition survey before you exchange contracts. If you are buying a brand new home, you may want a snagging survey. This inspection identifies poor finishes, missing fixtures and building defects so you can ask the developer to fix them before you move in.
If you are buying a resale property, you can choose between a Level 1, Level 2 or Level 3 home survey. A Level 1 survey describes the general condition and flags urgent defects, suiting conventional, newer homes in good condition. A Level 2 survey, widely called a HomeBuyer Report, suits conventional homes in reasonable condition and adds advice on repairs and maintenance. It is a visual, non-intrusive inspection. A Level 3 survey, widely called a building survey or full structural survey, is the most detailed. It suits older, larger, altered, unusual or run-down homes. If you are unsure which to pick, you should read more about choosing a level 2 survey or a level 3 survey.
The table below shows typical survey costs and turnaround times.
|
Survey level |
Estimated price range |
Inspection time |
|---|---|---|
|
Level 1 |
£300 to £450 |
1 to 2 hours |
|
Level 2 |
£400 to £950 |
2 to 4 hours |
|
Level 3 |
£600 to £1,500 or more |
4 to 8 hours |
These figures are typical 2026 prices, and local quotes will differ.
When you hire a surveyor, look for AssocRICS, MRICS or FRICS after their name and the words RICS Regulated for the firm. You can confirm both on the RICS Find a Surveyor service. RICS regulated firms must have a complaints handling procedure, give consumers free access to an independent alternative dispute resolution provider, and hold professional indemnity insurance. The RPSA is another recognised body for residential surveyors with its own survey products.
Under the Consumer Rights Act 2015, a surveyor must carry out their service with reasonable care and skill. Services arranged online or by phone normally carry a 14-day cooling-off period. If you ask for the work to start inside this period, you pay for what has been done up to that point.
Common questions
Do I pay for the valuation when I buy a First Home?
At the first sale of a new build, the developer obtains the initial valuation from a registered valuer acting in an independent capacity. Ask the developer or your conveyancer how that valuation is handled and who bears any cost. When you sell the property later, you as the owner must pay for the resale valuation by an RICS registered surveyor.
Do price caps apply when I sell the property?
No, the price caps of £250,000 or £420,000 in London apply only to the first sale of the property. When you sell, the maximum price is dictated entirely by applying your original percentage discount to the current 100 per cent market value.
What happens if my income rises after I move in?
Once you have bought the property, you no longer have to meet the eligibility criteria. A rise in your household income does not mean you must sell the home. Letting or selling the property does trigger First Homes rules.
Can I rent out a First Home?
Letting the whole property is usually allowed for no more than two years in total during ownership, and you should tell the council and check with your mortgage lender first. Longer lets may be allowed in certain circumstances with council permission. You can rent a room for as long as you like, provided the property remains your only or main residence and you live there.
Your next steps
Before you commit to a purchase, you must gather the right facts and assemble your professional team. Use this checklist to keep your purchase on track:
- Check your local council website to confirm if they participate and read their specific local criteria.
- Speak to a mortgage broker to confirm you can get a mortgage for at least half the discounted price.
- Instruct a conveyancer to explain the legal side of the purchase and what the discount rules mean for you.
- Get two or three like-for-like quotes for a condition survey that state the survey level and the turnaround time.
- Ask the surveyor about their experience with the local area and whether they will talk the report through by phone.
Buying a discounted home involves strict rules and permanent restrictions, so you must understand exactly what you are signing up for. Take the time to read the official guidance, get your mortgage in principle early, and arrange a proper inspection before you exchange contracts. When you are ready to book your inspection, you can find a surveyor near you to check the condition of the property.
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