Following the budget announcements yesterday, the government have announced a new scheme to recognise those who do not have the backing of the “bank of mum and dad”. Your First Homes has been announced as a new scheme to assist first-time buyers in getting onto the property ladder, with anticipation of the first sales taking place in April 2027.
Similar to the Help to Buy Scheme that came to an end in March 2023, it will involve a government-backed equity loan of 20% being granted to those who qualify as eligible for the Scheme. First-time buyers will then only require a 2.5% deposit and can then obtain a mortgage with qualifying lenders under the scheme for the remaining amount.
As information starts to come to light as to how the Your First Homes Scheme will operate, below are some key information for those wondering if NOW is the time to buy their first home:
About the Your First Home Scheme
- You will need a deposit of at least 2.5% of the purchase price.
- The government will provide an equity loan of 20%, interest-free for the first five years.
- Only applies to new build properties with qualifying developers; developers will start their registrations for the scheme by the end of December 2026.
- First customer applications can start to be made by February 2027.
- First sales under the scheme by April 2027.
Who will qualify?
- You must be a first-time buyer; if this is a joint application, you will both need to be first-time buyers.
- You must use the property as your main residence.
- You will have a total annual household income of £110,000 or less outside London; if you are purchasing inside London, this will be a total annual household income of £140,000 or less.
- You must be able to obtain a mortgage from a participating lender.
- There will be purchase price caps; a full list of price caps for each local authority will follow, but for now the example caps that have been provided are;
| Location | Property price cap |
|---|---|
| Reading | £375,000 |
| North Devon | £320,000 |
| Manchester | £355,000 |
| Middlesbrough | £220,000 |
London price caps
| Location | Property price cap |
|---|---|
| Inner London* | £650,000 |
| Outer London* | £500,000 |
*as defined in the London Plan 2021.
When you come to sell
Similar to the previous Help to Buy scheme, it is important to note that when you come to sell or repay your Help to Buy loan, you will repay the 20% based on the valuation of the property at the time you come to sell/repay. Therefore, if your home decreases in value, you could be repaying less than what you originally borrowed; however, if your home increases in value, you will be repaying a higher amount compared to what you originally borrowed.
How can we help
At Herrington Carmichael, we have a specialist New Build team, with a wealth of knowledge and experience of the many different New Build Schemes such as First Homes (different to the new government scheme), shared ownership, discount market and the old HTB scheme! If you want to know more about the new Your First Homes Scheme and are looking at buying a new-build home, please do reach out, and we would be happy to assist. Contact us here.
