Why these schemes matter for developers
Both Deposit Unlock and First Homes are government-backed mechanisms designed to help buyers access new-build homes. As a developer, they affect two critical things: how quickly you sell units (exit speed) and at what price (GDV). Understanding both is important for your development finance application.
Deposit Unlock
How it works
Deposit Unlock enables buyers to purchase new-build homes with a 5% deposit and a 95% LTV mortgage from participating lenders. The developer pays for a mortgage indemnity insurance policy (typically 1.5–2% of the property value) that covers the lender's additional risk between 80–95% LTV.
Developer benefits
- Faster sales: Removing the deposit barrier significantly expands your buyer pool, particularly first-time buyers.
- Full market value: Unlike affordable housing, Deposit Unlock units sell at full market value — the developer just pays for the insurance.
- Cost-effective: At 1.5–2% of property value, the insurance cost is modest compared to the benefit of faster sales and reduced holding costs.
Finance implications
If you plan to offer Deposit Unlock on some or all units, include the insurance cost (1.5–2% of GDV) in your development appraisal. This small cost is easily offset by faster sales — reducing the period of rolled-up interest and getting you out of the development finance facility sooner.
First Homes
How it works
First Homes are discounted market sale units sold to eligible first-time buyers at minimum 25% below market value (some councils require 30–50% discount). The discount runs in perpetuity — it applies every time the property is sold. Eligibility: first-time buyer, household income under £80,000 (£90,000 in London), and purchasing with a mortgage.
Planning requirements
Most local authorities now require 25% of affordable housing to be delivered as First Homes. On a scheme requiring 30% affordable housing, this means 7.5% of total units must be First Homes. The remaining affordable housing can be affordable rent, shared ownership, or other tenures.
Finance implications
First Homes directly affect your GDV because they sell at below market value. In your development appraisal:
- Value First Homes units at their discounted sale price (75–50% of market value), not full market value
- Factor in marketing and sales costs for First Homes (same as market units)
- Note that First Homes do not need a Registered Provider to purchase them — the developer sells directly to eligible buyers
Presenting these in your development finance application
When you upload your deal to Assesr, specify any Deposit Unlock insurance costs and First Homes requirements in your appraisal. The AI credit paper breaks down GDV by unit type (market sale, First Homes, affordable rent, shared ownership), giving lenders clear visibility of the revenue mix and realistic exit assumptions.