Your First Home Could Increase Affordable New-Build Options by 114% for Single First-Time Buyers

The property portal estimates that the number of currently available new-build homes affordable to an average solo first-time buyer could increase by 114% under the proposed Your First Home scheme.

The scheme is expected to allow eligible buyers to purchase qualifying new-build homes with a 2.5% deposit, supported by a 20% government-backed equity loan.

However, important details have yet to be confirmed.

How would Your First Home work?

The government announced the proposed scheme in September.

Under the outline currently available, eligible first-time buyers would contribute a minimum 2.5% deposit.

A government-backed equity loan would cover 20% of the purchase price, leaving the buyer with a mortgage covering the remaining 77.5%.

The government says the scheme is intended to help people who struggle to overcome the deposit barrier to home ownership.

Rightmove's 114% calculation

Rightmove compared a conventional purchase using a 5% deposit and 95% mortgage with the proposed Your First Home structure.

Its analysis assumes that a single buyer can borrow 4.5 times their annual salary.

Under the existing 5% deposit model, Rightmove calculated a maximum affordable purchase price of approximately £216,758.

Under its model of the proposed scheme, the figure rises to approximately £265,703.

That represents an increase of almost £49,000 in purchasing power.

Rightmove therefore estimates that the number of available new-build homes affordable to an average single first-time buyer could increase by 114%.

The deposit requirement also falls

The analysis estimates that the cash deposit required could fall from approximately £10,838 to £6,643 for the modelled purchase.

For households struggling to accumulate a deposit, that difference could be significant.

Saving thousands of pounds can take years when rent, household bills and other living costs consume a large part of monthly income.

Regional differences could be significant

The impact will not be the same everywhere.

Rightmove's analysis suggests the North West could offer particularly broad choice, with around 31% of currently available new-build properties potentially affordable to an average single first-time buyer under the proposed structure.

The city of Kingston upon Hull was identified as having the strongest affordability in the analysis, with around 75% of available new-build homes potentially within reach of the modelled buyer.

This reinforces an important point about the UK housing market: affordability varies dramatically by region.

The scheme is not yet fully confirmed

Potential buyers should be careful not to treat the 114% figure as a guarantee.

The government has announced the broad structure of the scheme but says further details will be confirmed at the Budget.

These details are expected to include:

• Household income limits

• Property price caps

• Eligibility requirements

• Implementation arrangements

• Participating developers

• Other scheme conditions

Rightmove also stresses that its analysis is based on the details available at the time and that the final scheme could differ.

Why is the government introducing the scheme?

The government has identified the deposit barrier as one of the major obstacles facing prospective first-time buyers.

At the same time, the scheme is intended to support the new-build market.

The government says the new-build housing market has faced challenges from international economic pressures and rising construction costs.

By increasing the number of people able to purchase qualifying new homes, the scheme could provide additional demand for developers.

What does this mean for housebuilders?

If the scheme is successfully implemented, developers could gain access to a larger pool of potential buyers.

That could be particularly relevant for new-build developments where affordability currently restricts demand.

However, developers will also need to consider the scheme's final rules, including any property price limits.

A development with homes priced above the relevant cap may receive little or no benefit.

What should first-time buyers do now?

Potential buyers should avoid making financial commitments based on the proposed scheme before its final rules are announced.

Instead, prospective buyers can:

• Check their credit position.

• Establish how much they could realistically borrow.

• Continue building their deposit.

• Research new-build prices in their target areas.

• Compare mortgage affordability.

• Monitor the government's Budget announcement.

• Speak to a regulated mortgage adviser before making a purchase decision.

Could the scheme materially change affordability?

It could, particularly for single-income first-time buyers.

The Rightmove analysis demonstrates that reducing the deposit requirement and introducing an equity loan can significantly change the relationship between income, mortgage borrowing and property price.

But the scheme's real impact will depend on its final design.

The 114% figure should therefore be viewed as an early estimate of potential impact, rather than a guaranteed increase in buyer choice.

If the final policy closely resembles the announced framework, however, Your First Home could become an important new feature of the English new-build market.

Sources: UK Government and Rightmove.

Disclaimer: Your First Home remains subject to final government rules. Buyers should obtain independent financial and legal advice before making decisions.