Your First Home: A 2.5% Deposit for New Builds, and the Numbers That Are Still Missing

The government said on 26 September 2026 that first time buyers in England will be able to buy a new build home with a deposit of 2.5%, supported by a government backed equity loan of up to 20% of the purchase price. The scheme is called Your First Home and the equity loan starts out interest free.

That is most of what has actually been published.

The part that decides who it applies to has not been set

The announcement confirms that a household income cap will apply, and that local property price caps will apply. It does not say what either of them is. It does not say how long the interest free period runs, when the scheme opens, or which developers are signed up. All of it is due at the Budget on 28 October 2026 (GOV.UK, 26 September 2026. Budget date confirmed 3 August 2026).

So the announcement does not yet let anyone work out whether they qualify.

New build only, and existing stock sits outside it

The scheme covers new build homes bought from participating developers. Homes that have been lived in are not in scope.

For our clients that matters more than the deposit figure does. A landlord selling a flat that has been let for eight years is selling an existing home, and a buyer using this scheme cannot use it on that flat. If you were expecting a government deposit scheme to widen the pool of buyers for existing rental stock, this one does not.

It also brings back the question of what the buyer ends up paying. Research by reallymoving in 2019, reported by Property Industry Eye on 28 September 2026, found that first time buyers using Help to Buy paid 10.3% more for new build homes than buyers who did not use it. Whether that repeats depends on caps and volumes nobody has seen yet.

What it means in practice

If you are buying new build as an investment, this puts subsidised buyers into the same developments, bidding for the same units. The harder question comes later, at the point where that flat is valued as a second hand flat for a sale or a remortgage rather than as a new build off a developer's price list.

If you are selling an existing let property, nothing about your buyer pool changed last week.

And if you are buying from overseas, the honest answer today is that the position is not published. The announcement sets out no residence condition either way, and the caps that will do most of the work are not written down. We will read the Budget documents on 28 October rather than the coverage of them.

One practical note for anyone with a purchase already running. Nothing here is in force. A scheme announced in September and confirmed in late October will not be helping anyone complete this quarter, so a transaction already in progress is running on the rules that exist now.

If you are weighing up a purchase or a sale over the next few months and want to work out what this does and does not change for your own situation, get in touch and we can go through it.

Sources

• GOV.UK, New first-time buyer scheme to be confirmed at Budget, 26 September 2026
• The Intermediary, Government unveils 2.5% deposit scheme for first-time buyers, 28 September 2026
• Property Industry Eye, Industry warns of risks after government unveils 2.5% deposit scheme, 28 September 2026, carrying reallymoving research from 2019
• Professional Pensions, Government confirms date for Autumn Budget 2026, 3 August 2026