Your First Home price caps need urgent rethink, brokers and builders warn
Builders and new-build brokers have reacted to the Your First Home price caps with frustration and disappointment, criticising the criteria for not “reflecting realities” in the market.
Meanwhile, industry body the Home Builders Federation (HBF) said the methodology behind the price caps had created some “quirks”.
As soon as the price caps, which are individually set for each local authority in England, were released on Tuesday, Helen Pierson, director of Mortgage Advice Bureau (MAB) New Homes, began receiving negative feedback from her team and her builder partners.
She commented: “One of my brokers said capping Sheffield at £260,000, only £5,000 more than Chesterfield and well below Rotherham at £285,000, was a ‘complete waste of time’.
“Sheffield is a more expensive area than Rotherham. At the very least, these two caps should be flipped around.
“At these price points, we’re in two-bed house territory or flats. The odd three-bed might sneak in, in less desirable areas. It did spark the question: have they been set at these levels for regeneration purposes?”
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Developer disappointment
Feedback from MAB New Homes’ builder partners was also far from positive.
One builder told Pierson that the scheme would help few builders or buyers in South Yorkshire. Another builder said only 7% of the homes they have scheduled to build over the next two years were within the price cap parameters.
“I’ve heard the caps described as useless and totally pointless, with another saying to sum up their feeling as ‘pretty disappointed’ was an understatement,” she added.
Meanwhile, Michael Burt, sales director at SME developer City & Country, launched a scathing attack on the price caps, which he said have created a “postcode lottery”, particularly in London.
He commented: “[The caps] do not reflect the realities facing first-time buyers. They urgently need to be reviewed.
“A £150,000 difference is highly significant for someone buying their first home. Capping eligible properties in Richmond at £500,000, compared with £650,000 in Lewisham, simply doesn’t add up.
“There are inconsistencies elsewhere, too. Bristol’s price cap is just £325,000, despite average house prices ranging from £354,000 to £392,500. In neighbouring Bath, the cap is £400,000, while average prices range from £525,000 to £600,000.
“These disparities make the scheme unnecessarily complicated and undermine the support it is supposed to provide.”
Too restrictive
First-time buyers using the scheme can put down a minimum deposit of 2.5% and take out a 20% government equity loan, interest-free for five years, to buy a new-build home.
Analysis by Hometrack of NHBC new-build pricing between November 2025 and October 2026 revealed that London, with price caps ranging from £500,000 to £650,000, had the highest share of sales that would fall within its caps, at 52%.
The North East and North West had the lowest share at 29%. Overall, 38% of new-build sales over the period would have met the price cap criteria.
SAM Conveyancing looked at new-build sales over a two-year period and found that less than a third of sales were within the caps.
Oxford fared the worst, the conveyancer found, with none of the 66 new homes sold to buyers in the city over the last two years coming in under its £415,000 cap. The typical new-build price in Oxford is £777,867.
Melton, in Leicestershire, was identified as one of the local authorities that would do well under the scheme. Around 90 qualifying homes are sold in the district each year, or 17 for every 10,000 residents, with 35% of its new builds under the £300,000 cap.
Andrew Boast, chief executive of SAM Conveyancing, said: “Limiting Your First Home to new builds was always going to restrict where first-time buyers could use it, and the price caps show just how tight that restriction is. Fewer than a third of the new homes sold in England come in under them, so in much of the country, buyers will be choosing from a small slice of an already small market.”
Tom McNulty, director of Gloucester Mortgage Centre, where the local authorities of Cheltenham and Gloucester have been capped at £325,000, 7% below the previous cap for the South West, said those in charge of setting the caps should revisit their calculations.
He commented: “My first impression is that these limits are going to need a rethink quickly or the scheme is going to be a waste of time. This wouldn’t be anywhere near enough for first-time buyers in Cheltenham.
“A search of Rightmove now shows one new-build two-bed terrace at £300,000 and some flats priced around £260,000. They’re very small homes and no three-beds, which is what first-time buyers want these days.
“First-time buyers want to avoid moving too quickly so they don’t incur stamp duty costs and estate agent fees, so they want to future-proof themselves and go for a three-bed house straight away.”
Mark Pender, director at MAB New Homes, said the price restrictions were a “mixed bag”, with some areas capped at levels that weren’t “in keeping with local market knowledge”. He said there are “clear winners”, such as York’s first-time buyers, who can buy a property priced up to £370,000, and “losers” like Middlesbrough, capped at £220,000.
“That won’t buy you much of a new build,” he added. However, he said that some builders had reported to him that 50-60% of their two- and three-bedroom properties would meet criteria.
“Hopefully the Home Builders Federation (HBF), lenders and brokers can canvass for a rethink on these numbers. Apparently, they are [median house prices in each local authority area] uplifted by 10%,” he said.
A spokesperson for the HBF said: “If it is to create momentum, price caps need to be set at a level that makes the scheme accessible for sites already underway while providing the industry with confidence that potential new sites will be viable with sales at that price.
“While the methodology used to establish these price caps has created some quirks, we will continue to monitor the effectiveness of the scheme and share insight with government.”
| Rank | Local authority | Region | Price cap | Share of new builds that qualify | Qualifying new builds sold (Oct 2023 to Sep 2025) | Typical new build |
|---|---|---|---|---|---|---|
| 1 | Oxford | South East | £415,000 | 0% | 0 of 66 | £777,867 |
| 2 | Worthing | South East | £300,000 | 1.1% | 1 of 90 | £409,472 |
| 3 | Blackpool | North West | £235,000 | 2.4% | 1 of 41 | £305,621 |
| 4 | Lancaster | North West | £285,000 | 3.1% | 4 of 131 | £462,231 |
| 5 | Islington | London | £650,000 | 3.6% | 11 of 304 | £1,144,863 |
| 6 | Westminster | London | £650,000 | 3.8% | 11 of 290 | £2,985,610 |
| 7 | Hammersmith and Fulham | London | £650,000 | 5.3% | 36 of 677 | £1,244,511 |
| 8 | Kensington and Chelsea | London | £650,000 | 5.6% | 7 of 124 | £1,904,642 |
| 9 | Oldham | North West | £300,000 | 6.2% | 13 of 210 | £404,326 |
| 10 | Burnley | North West | £230,000 | 7.6% | 15 of 198 | £318,312 |
Source: SAM Conveyancing analysis of HM Land Registry, ONS and Ministry of Housing, Communities and Local Government data.
