New first-time buyer scheme risks further house price inflation, warns Foxtons boss

The boss of Foxtons has warned that Labour's new first-time buyer scheme risks pricing more people out of the housing market if it only applies to new build homes.In last week's Budget, Chancellor John Healey provided more details about the Your First Home scheme, aimed at first-time buyers struggling to save up for a deposit. The new scheme, which offers buyers a 20 per cent equity loan with a 2.5 per cent deposit, only applies to new-build homes. Guy Gittins today urged the Government to launch a 'modified' version of the Your First Home scheme to pre-existing homes in a bid to 'help free up the wider market'. Extending the scheme beyond new-build homes would give first-time buyers more choice and 'avoid the price inflation seen under Help to Buy', he said. Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: 'The problem now is that the government wants to increase supply to meet its aspirational targets as quickly as possible but the impact is likely to mean higher prices and less affordable property for those buyers coming up behind. Guy Gittins, the boss of estate agency firm Foxtons, has warned that Labour's new Your First Home scheme will trigger higher property prices for buyers'The only way to ensure more balance is to energise supply at the same time by restricting some of the impediments on building via planning and taxation as well as ensuring local price caps based on income apply.'Experts have warned that the scheme will do little to boost the supply of housing in the UK. In a further blow, the Office for Budget Responsibility last week said the scheme would ‘only have a marginal impact on housing supply given its limited overall size.’The scheme will see the loans issued from April 2027 and receive £700million of Treasury support in the first year before rising to £1billion per annum thereafter.But analysts said this fell well short of the £2billion per year required to stimulate sufficient sales while also missing the start of the crucial spring selling season.The scheme also pales in comparison with the £3billion a year advanced under Help to Buy.And with support not due to start until next year, it is feared eligible first-time buyers may delay purchases, triggering a slump in demand over the next six months.Buyers using the scheme will also need to have an income of no more than £110,000 per household outside of London, or £140,000 per household inside London.Local property price caps will also apply, but have not yet been finalised. For inner and outer London these caps are likely to be £650,000 and £500,000 respectively, £375,000 in Reading, £320,000 in North Devon, £355,000 in Manchester and £220,000 in Middlesbrough. Tom Durbin St George, chief revenue officer of Moving Compared, said that 'there is a risk that some of the benefit [of saving a deposit] ends up in developers' asking prices if housebuilding does not keep pace with demand.' It came as new construction data showed a market downturn in residential housebuilding. S&P Global's PMI showed activity in the residential construction sector slumped to 35.1, its lowest since December 2025. A reading of 50 or above indicates growth. Tim Moore, economics director at S&P Global Market Intelligence, said: 'Construction companies commented on severe headwinds in the house building sector from rising borrowing costs, weak consumer confidence and elevated economic uncertainty.'Gittins also flagged concerns over stamp duty, which was unchanged in John Healey's Budget last week. Stamp duty is a tax paid by home buyers on properties or land worth over £125,000, or £300,000 for first-time buyers, in England and Northern Ireland.Gittins said: 'If the goal is to get more people into homes that suit their needs, stamp duty remains the biggest barrier at every price point, and we'd urge the Government to keep it firmly on the agenda.'DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you