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First Time Buyers' Initiative
The First Time Buyers' Initiative (FTBI) aims to make more affordable homes available to first-time buyers priced out of the housing market. This scheme enables key workers and other eligible groups to purchase a new build home on a designated FTBI development, with an affordable mortgage and government assistance.
The FTBI is delivered by English Partnerships as part of the Department of Communities and Local Government’s (CLG) HomeBuy low-cost home-ownership initiative.
About the scheme
FTBI is similar to other government shared equity schemes through which it enables eligible first-time buyers to buy a share in a new FTBI home.
The buyer must take out an affordable mortgage, which along with any deposit, must make-up a minimum of 50% of the full purchase price. In return the government will assist with up to 50% of the full property price. Assistance is paid to the participating housebuilder, not the first-time buyer. The government then has an entitlement to a share of the future sale proceeds which will be equal to the initial percentage contribution. For example, if government paid 50% towards a £200,000 home, it would be entitled to 50% of the achieved sale price on sale.
FTBI home owners can choose to reduce the amount payable to the government at any time by making repayments at the prevailing market value. The minimum additional repayment is 10% of the market value.
For the first three years of FTBI home ownership there is nothing to pay on the amount that the government contributed. After three years, buyers will pay a fee to the government (through the National HomeBuy Agent) of 1% per annum on the amount the government funded. This fee will increase each year by a fixed percentage reaching a maximum of 3% after five years in the property.
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There are around 50 FTBI schemes currently being marketed across the country and details of these schemes are available from the My FTBI Home website. |
Qualifying criteria
Around 50% of the homes made available through the initiative will be for key workers such as nurses, teachers and police officers living across England. The remaining homes will be available to those groups identified as priorities by Regional Housing Boards.
Key workers can only apply if their household income is less than £60,000. Different income limits may apply to other eligible groups.
Qualifying criteria for all applicants:
- Must be a qualifying first-time buyer unable to afford a new home. Applicants must not be able to buy a home suitable for their housing needs within a reasonable travelling distance of their work place without assistance.
- Must be able to demonstrate access to savings or sufficient funds to pay a deposit (which may be up to 5% of the purchase price), legal fees, stamp duty and other costs of moving.
- Must be able to sustain home ownership in the long term. Typically, applicants will be employed on a permanent contract of employment (there are exceptions for key workers).
If self-employed, the applicant must be able to provide accounts for the last three years. - Cannot already be a home owner or named on a home mortgage. If an applicant has had their name on a mortgage they will have to provide evidence that it has been (or is in process of being) removed.
- Applicants must have a good credit history.
- Applicants must take out a first mortgage with a qualifying lender.
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For further information please see the First Time Buyers Initiative Buyers’ guide (updated April 2008). This is available to download from the Publications page. |
HomeBuy Agents
There are 23 regional HomeBuy Agents in England. They act at a local level on behalf of the government to market and administer the FTBI schemes in their area. They are the contact point for first-time buyers, to assess eligibility and guide buyers through the process of buying an FTBI home.
Housing Options Plus is the National HomeBuy Agent. It provides a one-stop-shop for all FTBI home owners post-sale and manages English Partnerships’ interest until the home owner either pays back all of the government contribution or sells on.
For a list of all HomeBuy Agents and to register your interest, please visit the Housing Corporation website.
Designated developments
FTBI homes are only available on designated development schemes where the government has an agreement in place with the housebuilder to provide affordable homes for sale.
Three routes have been identified to provide new homes on designated FTBI developments. They will be provided:
- through current English Partnerships projects
- using private sector schemes, where developers receive FTBI funding. This allows them to sell a portion of their market sale homes to first-time buyers
- through surplus public sector land not in English Partnerships’ ownership.
English Partnerships has held two rounds of competition-style process for developers and Registered Social Landlords (RSLs) to submit schemes on which FTBI homes would be provided.
Around 100 FTBI schemes are currently being taken forward. There are no current plans to hold another competition round, although this will be reviewed over the coming months.
FTBI home sales
The FTBI home owner can sell their home at any time and an independent survey will decide its value. The government has an entitlement to a share of the sales proceeds. This will equal the initial percentage funded to assist the buyer.
What happens if property values fall?
If the market value of the property falls below the level at which the home was first purchased, the FTBI home owner will repay less than the original amount the government contributed to the original purchase.
Your home may be repossessed if you do not keep up payments on a mortgage or any other debt secured on it.
Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.
