The government’s new Your First Home scheme should provide welcome support for first-time buyers and help stimulate demand for new housing.
Expected to open for applications in February 2027, the scheme will offer eligible first-time buyers a government equity loan of 20% of the purchase price of a qualifying new-build home, alongside a minimum buyer deposit of 2.5%. The balance will be funded through a repayment mortgage from a participating lender.
The equity loan will be interest-free for the first five years, with interest payable thereafter. Repayment will generally reflect the same percentage of the property’s value when it is repaid. The published eligibility criteria include a maximum household income of £110,000 outside London and occupation as the buyer’s main home. Full scheme rules are still to follow.
For households who can afford mortgage repayments but struggle to save a deposit, this could make a meaningful difference. It could also help developers secure sales and give them confidence to start new schemes.
What does the cap mean for Cornwall?
On Tuesday, the government announced the local price caps for its new Your First Home scheme, setting a Cornwall-wide maximum eligible purchase price of £310,000.
This should accommodate the majority of standard new-build two-bedroom homes across Cornwall, together with typical three-bedroom new-build homes in Zone 5 and much of Zone 4. However, there will be exceptions, with higher-value locations such as St Agnes parish illustrating the variation within Zone 4.
The threshold becomes particularly restrictive in Zone 3, which includes Truro, Falmouth, Penryn and Newquay, where typical new-build three-bedroom homes in many locations are already priced above £310,000. The choice of qualifying family homes will be more limited still in Zones 1 and 2. This includes locations such as Rock, Fowey, Mylor, St Ives and Padstow.
Buyers may therefore find qualifying properties in one part of Cornwall, while comparable homes elsewhere exceed the cap.
Could the threshold influence what gets built?
The cap could also affect developers’ decisions about housing mix and floor area.
In locations where a typical three-bedroom home would exceed £310,000, there may be a commercial incentive to build smaller properties that can be sold beneath the threshold. Access to buyers using the scheme could improve sales rates and make those homes more attractive to deliver.
Smaller, lower-priced homes can meet an important need. However, there is a risk that developers design homes around the price cap rather than the range of homes local households require.
This could mean more two-bedroom homes, more compact three-bedroom layouts, or fewer larger family homes.
A price cap is reasonable to keep public funding focused and avoid simply supporting increasingly expensive homes. However, Cornwall’s housing market is too varied for one threshold to work equally well everywhere.
It would be good to see the government give local authorities scope to propose evidence-based variations to the price caps, helping the scheme better reflect local housing markets.
For Cornwall, the existing value zones could provide a practical basis for varying the cap. While not perfect, they would recognise broad differences in property values without making the system overly complex.
What could Your First Home mean for your development?
Vickery Holman’s development team advises on residential values, housing mix and development viability across Cornwall and the wider South West.
Get in touch to discuss how the scheme’s price cap could affect your development proposals.
