Rightmove says Burnham’s first time buyer scheme could succeed

New analysis from Rightmove suggests Andy Burnham’s Your First Home scheme could more than double the number of currently available new-build homes affordable to an average solo first-time buyer in England.

Based on the scheme details announced so far, Rightmove’s analysis suggests that the number of new-build homes affordable to the average solo first-time buyer could increase by 114%, compared with buying using a standard 5% deposit and 95% mortgage.

The analysis assumes that a buyer can borrow 4.5 times the average annual salary and compares two routes – the traditional way of purchasing with a 5% deposit and a mortgage covering 95% of the property price, or alternatively purchasing under Your First Home with a 2.5% deposit, a 20% government-backed equity loan and a mortgage covering the remaining 77.5%.

On this basis, the maximum property price affordable to an average single buyer could increase from £216,758 to £265,703, an increase of nearly £49,000. The required cash deposit would fall from £10,838 to £6,643.

Rightmove’s analysis is an early indication of the scheme’s potential impact, based on currently available new-build homes, salary averages and the elements of the scheme announced so far. 

Actual affordability and eligibility will depend on the final rules, individual buyers’ circumstances, lender affordability assessments and the developers participating in the scheme.

At a regional level, Rightmove’s analysis suggests the North West would have the highest proportion of available new-build homes affordable under the proposed scheme.

Around 31% of the region’s available new-build homes could fall within the estimated purchasing power of an average solo first-time buyer, up from 20% currently with no scheme in place.

Yorkshire and the Humber could see one of the largest improvements in choice. The proportion of available new-build homes potentially affordable to an average solo buyer could rise from around 10% to 22%.

Rightmove’s local analysis highlights where the greatest overall number of affordable homes could be available.

The city of Kingston upon Hull would have the largest overall availability of affordable new-build homes under the new scheme, with three-quarters (75%) of new-build properties in the area affordable to a single first-time buyer earning the average wage for that region.

Liverpool follows with 72% of new build homes being accessible to a solo first-time buyer under the proposed Your First Home scheme, and Luton is third at 53%.

Final details about the scheme will be announced at the Budget.

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