The government’s new Your First Home scheme could more than double the number of new-build properties within reach of a single first-time buyer, according to analysis from Rightmove.
The property portal estimates the number of currently available new homes affordable to an average solo buyer in England could increase by 114% under the proposed scheme.
It calculates that the maximum purchase price available to a single buyer on an average salary could rise by almost £49,000, from £216,758 to £265,703.
The cash deposit required in Rightmove’s example would simultaneously fall from £10,838 to £6,643.
20% EQUITY LOAN
The government has confirmed that Your First Home is expected to allow first-time buyers purchasing qualifying new-build properties in England to use a 2.5% deposit alongside a 20% government-backed equity loan.
Developers will have to sign up to the scheme and make a contribution towards its costs.
Rightmove’s modelling assumes a solo buyer can borrow 4.5 times the average annual salary and compares the scheme with purchasing using a 5% deposit and 95% mortgage.
Under Your First Home, its calculation assumes the buyer provides a 2.5% deposit, receives a 20% equity loan and takes a mortgage for the remaining 77.5%.
However, the final household income and local property price caps have yet to be announced, meaning the analysis provides an indication of the potential impact rather than the number of buyers who will ultimately qualify.
REGIONAL DIVIDE
The North West could provide the greatest choice, with Rightmove estimating 31% of currently available new-build homes would be affordable to an average solo first-time buyer under the scheme, compared with 20% without it.
In Yorkshire and the Humber, the proportion could more than double from 10% to 22%, while in the North East it could increase from 5% to 14%.
The impact would be considerably smaller in more expensive markets.
Rightmove estimates the proportion of new-build homes within reach of an average solo buyer in London could increase from just 1% to 5%. In the South East it could rise from 4% to 9%.
HULL LEADS
At local authority level, Kingston upon Hull has the highest proportion of potentially affordable new-build stock in Rightmove’s analysis, at 75%.
Liverpool follows at 72%, with Luton at 53%, Blackpool at 51% and Hillingdon at 45%.
Alex Slater, Director of New Homes at Rightmove, says: “Early analysis based on what we know about the Your First Home scheme so far suggests it could make a meaningful difference to the choice available to first-time buyers, particularly those purchasing on their own.
“The combination of a smaller deposit and a 20% equity loan could increase the maximum price an average solo buyer can afford by almost £50,000, while also reducing the amount they need to save upfront. This could bring thousands more currently available new-build homes within reach.
“The impact is likely to vary significantly between local markets. In some areas, the biggest benefit could be an increase from a very limited number of affordable homes today. In others, buyers could gain access to a much wider overall pool of properties.
“The final details announced at the Budget will be crucial, particularly any income and property price caps and regional variations. However, the early figures underline the potential for a well-targeted scheme to help more first-time buyers overcome both the deposit and borrowing barriers.”
“A smaller deposit and additional borrowing capacity could open up more choice.”
Nathan Emerson, CEO of Propertymark, says: “Helping solo first-time buyers overcome the deposit and borrowing hurdles could make a real difference, particularly in areas where new-build homes are already within reach of average local earnings. But increasing purchasing power does not automatically mean buyers will find the right home at the right price.
“In practice, affordability remains a balance between the mortgage a buyer can secure, the deposit they can raise and the homes available in locations where they need to live.
“The impact of the scheme will therefore vary significantly between local markets, and its final rules will be important in determining how many buyers can actually benefit.
“For those who can access it, a smaller deposit and additional borrowing capacity could open up more choice. The key will be ensuring that increased purchasing power translates into genuinely accessible homes rather than simply allowing buyers to compete for a limited supply.”
