For the residential development market, the announcement provides a clearer framework for assessing potential demand. However, the full local authority price-cap list and detailed operating rules are still to follow.
What Has Been Announced
Eligible first-time buyers will be able to purchase a qualifying new-build home from a participating developer with a minimum deposit of 2.5% and a government equity loan of 20% of the purchase price. At the minimum deposit, a repayment mortgage would cover the remaining 77.5%, subject to a participating lender's affordability and credit checks.
The property must be in England and intended as the buyer's main home. Total annual household income must be £140,000 or less in London or £110,000 or less elsewhere in England. Full eligibility rules will be published before applications open.
London property price caps are £650,000 in inner London and £500,000 in outer London, using the areas defined in the London Plan 2021. The full schedule of local authority price caps is due shortly; these London figures should not be treated as nationwide limits.
The government has also announced £4.7 billion of funding over five years. Allocation will be managed with developers and demand kept under review, so eligible buyers and developers should not assume unlimited availability.
A Smaller Deposit, Not a Free Contribution
On a £300,000 home, the government's illustration combines a £7,500 deposit, a £60,000 equity loan and a £232,500 repayment mortgage. This reduces the initial deposit and mortgage borrowing compared with buying the same home using a standard 95% mortgage, but the equity loan remains repayable.
The equity loan is interest-free for the first five years. Interest is 1.5% in year six and 3% from year seven. On an unchanged £60,000 equity loan, that equates to £75 a month in year six and £150 a month from year seven, separate from mortgage payments. These interest payments do not reduce the equity loan principal.
The amount repaid will normally reflect the government's original percentage share of the home's value at repayment, rather than simply the amount initially borrowed. If a £300,000 home bought with a 20% equity loan is later valued at £320,000, the government's example shows a repayment of £64,000. If its value falls to £280,000, the corresponding repayment is £56,000.
The loan will normally be repaid when the home is sold, with partial or full repayment before sale also possible. Valuation requirements, minimum repayment amounts, any fees and rules for selling or remortgaging remain subject to further guidance. Buyers should consider the full cost of ownership and obtain independent financial and legal advice before committing.
How the Developer Fees Work
Participation fees will be applied to the final sale price of homes sold through the scheme, with rates increasing according to each developer's annual scheme sales:
- First 100 homes: 1%
- Homes 101 to 250: 3%
- Homes above 250: 4%
The bands apply progressively, rather than the highest band being charged retrospectively across all sales. A developer selling 500 homes would pay 1% on the first 100, 3% on the next 150 and 4% on the remaining 250. The effective fee as a share of total sales proceeds will depend on the sale prices within each band.
Developers of all sizes may participate, subject to scheme requirements and a participation agreement. The structure gives smaller participants a lower initial fee rate, while larger sales programmes will need to model the higher marginal charges.
The Expected Timetable
- By the end of December 2026: customer pre-registration and guidance, alongside the first developer registrations.
- February 2027: first customer applications expected.
- April 2027: first property sales under the scheme scheduled.
Applications are not open yet. Pre-registration will not commit a customer to purchasing through the scheme. Full guidance, terms and conditions are due before applications open.
GLPG's View
Your First Home could provide a meaningful improvement in access to new-build home ownership for households whose principal obstacle is saving a deposit. For developers, a broader pool of mortgage-ready buyers could support sales rates and improve confidence in bringing forward suitable residential schemes. Neither stronger absorption nor additional supply is guaranteed, however: mortgage affordability, local price caps and delivery constraints will still shape the outcome.
From an agency perspective, the priority is to test the scheme against the local buyer market, product mix and realistic achievable prices. The inner and outer London caps may influence which homes qualify, but they do not remove the need for evidence-led pricing.
From a capital advisory perspective, participation fees should be incorporated into net sales proceeds, cash-flow forecasts and development finance appraisals. Sales timing, lender participation and funding allocation will matter as much as the headline deposit reduction. Schemes should be stress-tested with and without Your First Home support, rather than relying on unconfirmed take-up assumptions.
The scheme also serves a different purpose from affordable housing tenures and should not be assumed to replace existing affordable housing obligations. Its relationship with wider tenure strategies and planning commitments needs to be assessed against the final rules and each site's circumstances.
Overall, the announcement is a constructive demand-side measure. Its effectiveness will depend on whether the final framework supports sustainable buyer affordability while enabling commercially viable new homes to be delivered. The next important milestones are the complete local price-cap schedule, participation terms and practical guidance on repayment and administration.
Source and Editorial Notes
Your First Home: official government guidance, published 28 October 2026
The original government announcement, published 26 September 2026
