The homes you can actually get with the new first-time buyer scheme

This article includes affiliate links. When you make a purchase through these links, we may earn a commission. This does not affect our recommendations or opinions. First-time buyers across England know how much they can spend under the Government’s new £4.7bn Your First Home scheme – but what kind of property that budget will realistically buy? Following the recent Budget announcement of the scheme – which allows first-time buyers to purchase new builds with a small deposit – ministers published individual property price caps for every local authority in England. Research from property portal Zoopla suggests that while flats are largely within reach of the scheme, buying a newly built family house could prove much harder. So, how far does the new scheme stretch in Britain’s biggest cities – and what kind of home can you actually get? How does the Your First Home scheme work? Designed to help around 70,000 households onto the property ladder and support 20,000 new homes, the scheme is set to open for applications in February 2027. Eligible first-time buyers can purchase a new-build home with a deposit of just 2.5 per cent, alongside a government-backed equity loan of up to 20 per cent. Household income is capped at £110,000 outside the capital and £140,000 within London. The scheme applies strictly to newly built properties, meaning buyers looking at older, second-hand homes cannot use it, and in each area, there is a maximum house price they can pay. London Local authority caps: £650,000 (Inner London boroughs, including Camden, Islington, Lambeth and Newham) and £500,000 (Outer London boroughs, including Croydon, Ealing, Hounslow and Barnet).London’s higher limits reflect its steep property prices, though experts say in some areas the thresholds could limit what buyers can get. Oliver Knight, head of residential development at Knight Frank, warned that the £650,000 and £500,000 thresholds may still restrict take-up in parts of the capital. Speaking to The i Paper, he said: “The impact is likely to be greater in more affordable markets, where a larger proportion of new-build stock falls within the local thresholds.” According to research by Zoopla, the majority of newly built one-bedroom flats – 90 per cent in outer boroughs and about 63 per cent in inner boroughs – would be eligible for the scheme, but only a third of two-bedroom properties It found that three-bed houses under the cap were likely to be exceedingly rare. Manchester Local authority cap: £355,000 (Manchester City Council). Research by housing portal Zoopla suggests 65 per cent of new-build homes in the city fall below the £355,000 ceiling. Greg Davies, associate director of Reeds Rains Manchester estate agency, said there were plenty of homes in reach. He said: “Manchester certainly has luxury new-build apartments, reflecting its status as a highly desirable city. “However, it is inaccurate to suggest that the new-build market is almost entirely made up of properties aimed at wealthy investors or priced above the scheme’s cap. There are plenty of homes within reach.” Analysis by Richard Donnell, executive director at Zoopla, found that Manchester offers particularly strong options for buyers looking at flats. Almost all newly built one-bedroom apartments – 94 per cent, typically priced at around £200,000 – fall below the city’s £355,000 cap. But the proportion drops to 42 per cent for two-bedroom flats, illustrating how quickly options narrow as buyers look for more space. Birmingham Local authority cap: £315,000 (Birmingham City Council). Birmingham’s £315,000 cap sits comfortably above entry-level new-build prices in the city, according to experts. According to local estate agents, one-bedroom new-build apartments are widely available for between £200,000 and £250,000, while two-bedroom flats can be found in the high £200,000s to low £300,000s. Zoopla’s research suggests that 95 per cent of new-build one-bedroom flats in Birmingham, typically priced at around £190,000, fall within the £315,000 cap. The figure is 59 per cent for two-bedroom flats, while many newly built two-bedroom houses are also eligible. Very few three-bedroom houses fall below the threshold, making it considerably harder for families or buyers wanting more space. Leeds Local authority cap: £305,000 (Leeds City Council). With a local authority cap of £305,000, Leeds offers some of the strongest options for buyers hoping to live near the centre. Brad Ogden, sales director at Linley & Simpson and Hardisty, said a steady pipeline of developments has kept prices relatively stable compared with other major cities. He said: “Leeds is a market for local buyers; the city centre prices are affordable and well within the example price caps. Leeds offers some of the strongest options for buyers wanting more space, according to Donnell. Around 94 per cent of new-build one-bedroom flats, typically costing £186,000, fall within the £305,000 cap, alongside 76 per cent of two-bedroom flats. More unusually, 78 per cent of new two-bedroom houses also qualify, with typical prices of around £275,000. Bristol Local authority cap: £325,000 (Bristol City Council). In Bristol, where the city council cap is set at £325,000, the challenge is less about finding a qualifying flat and more about whether new-build stock matches what buyers want. Josh Carter, director of sales at Boardwalk Property Co, said: “The problem is that a lot of first-time buyers are looking to skip what would have been the starting point of getting onto the ladder – a flat somewhere central – and instead looking for a larger property a little further out that could satisfy their need for a longer timeframe.” Carter added that prices for second-hand city-centre flats have softened in some areas as landlords sell off former rentals – properties that fall outside the new-build-only scheme. But buyers hoping to purchase a newly built family house may find their options much more limited. Zoopla’s research found that just 2 per cent of new three-bedroom houses in Bristol fall below the city’s £325,000 cap. This reflects the gap between the scheme’s price limits and the cost of building larger new homes. What buyers need to watch out for While a 2.5 per cent deposit lowers the upfront hurdle, mortgage brokers warn buyers to factor in the long-term costs of the equity loan. The Government loan is interest-free for the first five years, before interest charges begin at 1.5 per cent in year six and rise to 3 per cent from year seven. David Hollingworth, of mortgage broker L&C Mortgages, also noted that newly built homes often carry a price premium that can dip in the short term. He said: “Buyers that have only a small deposit could therefore drop into negative equity, although that only really bites if you must sell.” Donnell said the differences between cities and property types meant buyers should not assume the scheme will offer the same opportunities everywhere. In Birmingham, Bristol and Leeds, typical prices for newly built three-bedroom houses range from £365,000 to £436,000, putting most beyond the local caps. The best prospects for first-time buyers wanting a three-bedroom house are in Nottingham, where 57 per cent of new homes of this type qualify, and Leicester, where the figure is 55 per cent.