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Less than a third of homes will qualify under the Labour’s new scheme to help first-time buyers get on the property market, research shows.
Under the Your First Home Scheme, the government has promised to provide an interest-free loan on new build homes for individuals or couples earning a combined income of £110,00 or less a year.
Buyers will face different property price caps depending on where they live, with a survey from SAM Conveyancing in The Times revealing that just 30 per cent of homes will be eligible.
The property company found that the cap was below the price of an average new build home in 264 of the 285 local authorities that it analysed, meaning less than half of homes were eligible.
In 97 local authorities, less than a quarter of homes would qualify, it said.
Andrew Boast, the chief executive of SAM Conveyancing, has called for the government to open up the scheme to all homes.
He 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.”
The lowest proportion of qualifying homes was in Oxford, where none of the 66 new build properties sold over the last two years was under than the cap of £415,000. According to the research, the average new build cost £777,867.
Similarly, in Worthing, only one of the 90 new build homes would have been eligible under the scheme. The government has a £300,000 cap in the area, but the typical new build costs £409,472.
The caps reach as high as £650,000 in areas in central London, including Westminster, Kensington and Chelsea and the City of London. Only 3.6 per cent of homes would qualify in Islington, 3.8 per cent in Westminster, 5.3 per cent in Hammersmith and Fulham, and 5.6 per cent in Kensington and Chelsea.
The area with the highest proportion of eligible homes was in Melton, where 35 per cent of new build sales fell below the area’s £300,000 cap.
A government spokesperson said: “Your First Home will help first-time buyers across the country without the bank of mum and dad onto the housing ladder and is specifically designed to target support to those who need it most, based on the median price paid by first-time buyers for new build homes in their area.
“The analysis presented does not consider the type of new build home being sold in the areas highlighted and whether those would actually be purchased by first time buyers rather than the broader market.
“Industry estimates have found almost half of all new build homes sold in England last year and two-thirds of new build flats would be covered by the price caps.”
It said the caps are based on the median price paid by first-time buyers for new build homes with an additional 10 per cent added above this and rounded up to the nearest £5,000.
The government says to scheme will help 70,000 people get onto the property ladder and save first time buyers hundreds of pounds a month.
Eligible buyers will be able to purchase their home using a deposit of at least 2.5 per cent of the purchase price.
Mr Boast said: “Opening the scheme to existing homes, with the equity loan based on an independent valuation instead of the agreed price, would give first-time buyers far more choice and help keep prices in check.
“Until then, anyone hoping to use it should check early which homes fall under the cap in their area, and speak to a conveyancer before reserving a plot.”