The proposed Your First Home scheme could more than double the number of new-build properties within reach of single first-time buyers, according to new research from Rightmove.
The property portal estimates that the scheme could increase the number of affordable new-build homes in England by 114% for an average solo buyer.
It could also boost their maximum purchasing power by almost £49,000, while reducing the deposit needed to get onto the property ladder.
The findings are based on the scheme’s proposed structure, which combines a 2.5% buyer deposit with a 20% government-backed equity loan. A mortgage would cover the remaining 77.5% of the purchase price.
Under a conventional mortgage requiring a 5% deposit, an average single buyer could afford a property costing up to £216,758.
Rightmove calculates that the proposed scheme could increase that figure to £265,703. The required cash deposit would fall from £10,838 to £6,643.
The analysis assumes buyers can borrow 4.5 times their annual salary.
North West offers greatest choice
The North West could have the highest proportion of affordable new-build homes under the scheme.
Rightmove estimates that 31% of currently available new-build properties in the region could become affordable to an average solo first-time buyer. That compares with 20% under conventional mortgage arrangements.
Yorkshire and the Humber could also see a substantial improvement, with the proportion rising from 10% to 22%.
In the North East, the figure could increase from 5% to 14%, while the East Midlands could see an improvement from 4% to 13%.
However, affordability would remain a significant challenge in southern England.
In London, just 5% of available new-build homes could fall within the average solo buyer’s purchasing power, compared with 1% currently.
The South East could see an increase from 4% to 9%, while the South West would rise from 3% to 7%.
Hull and Liverpool lead the way
At a local level, Kingston upon Hull could offer the widest choice, with 75% of available new-build homes potentially affordable under the scheme.
Liverpool follows at 72%, ahead of Luton at 53% and Blackpool at 51%.
In Greater London, Hillingdon could see 45% of available new-build homes become affordable to an average solo buyer. Bexley follows at 40%.
Manchester and Salford could also benefit, with estimated affordability levels of 41% and 38% respectively.
Final rules will determine impact
Alex Slater, Rightmove’s director of new homes, said: “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.”
Rightmove stressed that its findings are preliminary and based on currently available properties and average regional earnings.
Actual affordability will depend on the scheme’s final eligibility criteria, individual financial circumstances, mortgage lenders’ assessments and developer participation.
The government is expected to provide further details at the Budget.
