First Steps

How does First Steps help?

First Steps is the affordable homes buying schemes that operate in London and London Boroughs only. First time buyers in London who cannot afford a large deposit and who are unable to afford to purchase a new home outright may be eligible for financial help through equity loans that are provided by the Government's Home and Communities Agency (HCA) in association with new build home developers and shared ownership schemes.

Who is eligible?

  • Householders earning £66,000 per year or less (£80,000 per year or less if looking for a home with three or more bedrooms)
  • Don't currently own a home
  • Have the funds for a deposit on the property share they buy as well as for a mortgage and associated buying costs
  • Have no outstanding credit problems

How does it work?

With the shared ownership scheme you will be able to buy a brand new property or a resale shared ownership property on a part buy, part rent basis. A percentage of the property value, between 25% and 75%, is bought by the householder depending on what they can afford, and the remainder of the balance is payable by the householder through a subsidised rent.

With the equity loans schemes, a buyer can purchase at least 80% of the house value with a mortgage and deposit. The remaining cost up to 20% of the property value is paid jointly by the Government and the house builder with the equity loan. When you sell your home, the percentage of the value that is owned by the Government and house builder is paid back to them. You will be able to buy a greater share in your property until you own the property outright which is known as `staircasing'.

Example of how a shared ownership scheme works

Total property purchase price £180,000 100%
Your equity share in property £90,000 50%
Housing association equity share £90,000 50%
Costs per month in mortgage payments and rent
Mortgage payments at 6% interest only over 25 years £405.00  
Rent at 3% of £90,000 £225.00  
Total Monthly payment £630.00  

Example of how an equity loan works

  Cost Percentage
Total house purchase price £180,000        100%
Buyer deposit £9,000 50%
Buyer Mortgage £135,000 75%
Equity Loan £36,000 20%

What to consider

Shared ownership properties are leasehold properties with leases that are fixed for a certain period of years, for instance 99 years. When you buy your home, you become the owner of the lease which is granted by the housing association for the fixed period.

There may be additional ground rent and/or service charges that will need to be paid by you. You will be responsible for internal repairs to the property.

An equity loan is paid back as a percentage of the value of your home. An equity loan means that the value of the loan you borrow is based upon the value of your property. The amount you owe on the loan will rise and fall with the value of your home depending on the property market.

The property's title will be in your name which means you can sell your property at any time. Out of the property sale value, the Government and house builder will receive the same share of your home's price when you sell it. When you pay back the equity loan, you are increasing the equity share that you have in the property and lessening the loan amount you have borrowed.

Equity loans are subject to fees. For the first five years you will not be charged fees. However after five years you will be charged a fee of 1.75% of the loan's value which will increase thereafter according to the Retail Price Index.

If you do not sell your property after 25 years, then you are required to pay back the equity loan.

Qualifying criteria for the schemes can differ.

How to apply

Search the affordable homes in London  that are available under this scheme and contact the house builder directly.

You will need to apply for an equity loan through the First Steps agent. The First Steps agents are housing associations who can assist people in buying homes. You can contact the First Steps agent who is in the area where you want to buy a property who will deal with your application.