Your First Home ‘to have half the impact of Help to Buy’ – Mortgage Strategy
The government’s Your First Home scheme will only have half the impact of Help to Buy because of income and local house price caps, Zoopla has warned.
Chancellor John Healey revealed further details of the scheme in his Budget today.
Income caps will be set at £110,000 per household outside London and £140,000 inside London.
Price caps will be based on local authority median prices with inner and outer London caps of £650,000 and £500,000 respectively.
Documents published alongside the Budget give several examples of these local caps, including a purchase price limit of £375,000 for Reading and £355,000 for Manchester.
Zoopla executive director Richard Donnell says the scheme is far less generous than Help to Buy for England as a whole, but it is much more helpful for London buyers.
Zoopla estimates that more than a third of new homes across England would fall within the likely price caps.
But the higher caps in London would lift that proportion to almost half at an England-wide level.
He says: “Help to Buy was far more generous, with no caps in the early years and then some caps from 2021 to 2023.
“There was also no income limit and it was open to non-first-time buyers as well.”
Zoopla says the likely price caps outside London are below the old Help to Buy caps when adjusted to current prices in much of the south and are also below average new-build prices.
However, the scheme is expected to be substantially more generous in London, where Zoopla estimates almost three-quarters of new homes for sale could qualify.
Donnell says: “The higher-than-expected caps in London mean almost three-quarters of homes in London would be accessible.
“This is designed to support the London new-build market.
“We have calculated that all these homes would be affordable on an income of £140,000 a year with a 2.5% deposit.
“The Your First Home scheme looks more generous than expected, giving the London new homes market a boost, with almost three-quarters of homes qualifying and all affordable under the proposed income cap.
“London’s caps look set to be the most generous and will mean the scheme could apply to up to half of all new homes.”
