Property portal Rightmove have suggested the proposed Your First Home scheme could more than double the number of available new-build homes affordable to an average solo first-time buyer in England, compared with buying with a standard 5% deposit and 95% mortgage.
On reviewing its own data, and with the limited information supplied to date on how the scheme might work, the portal suggested that the number of new-build homes affordable to the average solo first-time buyer could increase by 114%.
Their analysis assumes a buyer can borrow 4.5 times the average annual salary and compares two routes: purchasing with a 5% deposit and a mortgage covering 95% of the property price or purchasing under Your First Home with a 2.5% deposit, a 20% government-backed equity loan and a mortgage covering the remaining 77.5%.
On this basis, the maximum property price affordable to an average single buyer could increase from £216,758 to £265,703, an increase of nearly £49,000. The required cash deposit would fall from £10,838 to £6,643.
Rightmove said their analysis is an early indication of the scheme’s potential impact, based on currently available new-build homes, salary averages and the elements of the scheme announced so far.
Alex Slater, Rightmove’s director of new homes 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.”
At a regional level, Rightmove’s analysis suggests the North West would have the highest proportion of available new-build homes affordable under the proposed scheme.
Around 31% of the region’s available new-build homes could fall within the estimated purchasing power of an average solo first-time buyer, up from 20% currently with no scheme in place.
| Region | % of new build homes affordable today to solo first-time buyers with a 5% deposit and 95% mortgage | % of new build homes potentially affordable under Your First Home to a solo first-time buyer |
| North West | 20% | 31% |
| Yorkshire & The Humber | 10% | 22% |
| North East | 5% | 14% |
| East Midlands | 4% | 13% |
| West Midlands | 4% | 10% |
| South East | 4% | 9% |
| East of England | 3% | 9% |
| South West | 3% | 7% |
| London | 1% | 5% |
*table credited to Rightmove
