What Are the Rules for Selling or Renting Out a First Homes Property

If you own a First Homes property, there are specific rules you must follow when letting or selling it. While you can rent out your home for up to two years, there are exceptions for longer periods in special circumstances. When selling, you must apply the same percentage discount you received when purchasing. This guide explains everything you need to know about renting, selling under the scheme, and selling on the open market.

Letting a First Homes Property

Short-Term Letting (Up to 2 Years)

• You can let your entire property for up to two years in total while you own it.
• Before doing so, you must:
  • Inform your local council.
  • Check with your mortgage lender to ensure your loan terms allow letting.
• The two-year limit resets if you sell the home to another First Homes buyer.

Letting for More Than 2 Years

You may be allowed to rent out your home for more than two years if you face exceptional circumstances, such as:

• Job relocation to another area.
• End of a marriage or long-term relationship.
• Escaping domestic abuse.
• Redundancy or financial hardship.
• Becoming a caregiver for a relative or friend.

To rent out your home for longer than two years, you must get permission from your local council and may also need approval from your mortgage lender.

Letting Out a Room

You can rent out a room in your First Home for as long as you want, as long as:

• The home remains your only or main residence.
• You continue living in the home while renting out the room.

Selling a First Homes Property

When selling your First Home, you must offer the same percentage discount that you originally received.

Steps to Sell Under the First Homes Scheme

1. Inform the local council that you want to sell your home.
2. Find an estate agent who understands First Homes scheme rules.
3. Get the property valued by a surveyor registered with the Royal Institution of Chartered Surveyors (RICS).

Your sale price will be based on the current market value minus the discount percentage you originally received.

Example:

• You originally received a 30% discount.
• A RICS surveyor values your home at £200,000.
• You must apply the 30% discount, reducing the price by £60,000.
• The maximum price you can sell for is £140,000.

You can sell for less, but not for more than the calculated amount.

Who Can Buy Your First Home?

• Your buyer must meet First Homes eligibility criteria.
• If your property has been on the market for more than three months, the buyer no longer needs to meet local eligibility criteria but must still qualify for the scheme.

Selling Your Property on the Open Market

If you struggle to sell your home under the First Homes Scheme, you may be allowed to sell it at full market price to any buyer.

When Can You Sell on the Open Market?

You must get permission from your local council to sell on the open market. They may approve your request if:

• You have unsuccessfully tried to sell your property as a First Home for six months or more.
• Selling under the scheme would cause severe financial difficulties, such as bankruptcy.

What the Council Can Do

If you request to sell at full market value, the council has three options:

1. Allow you to sell it on the open market.
2. Offer to buy your home themselves at the discounted price.
3. Ask you to try selling it under the scheme for another six months. If you still cannot sell after this, they must let you sell it on the open market.

Returning the Discount to the Council

If the council allows you to sell on the open market, you must return the original discount percentage to them. This means giving the council the same percentage of the final sale price as the discount you received when you bought the home.

Example:

• You bought a First Home worth £250,000 for £175,000 after receiving a 30% discount.
• You later sell the home for £300,000 on the open market.
• Since you originally got a 30% discount, you must return 30% of the final sale price to the council.
• 30% of £300,000 = £90,000 must be paid back to the council.

If you own a First Homes property, you have the flexibility to rent it out for up to two years, with extensions possible in special cases. When selling, you must apply the same percentage discount that you originally received. If you struggle to sell under the scheme, you may request to sell on the open market, but you must return the discount percentage to the local council. Understanding these rules will help you manage your property effectively while following the scheme’s requirements.

FAQ’s