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22 October, 2026 · 4 min read

My First Home – Is this the ‘Emperor’s New Clothes’ or will it have real impact in London? Only if the capital gets a higher cap.

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In September, the Government announced that it would be unveiling a new package of support for buyers at the October budget next week – “Your First Home”.

The plan would provide a 20% government-backed loan, which would allow aspiring first-time buyers buy a home with just a 2.5% deposit. Details are limited, but on that basis it looks very similar to the Help to Buy scheme which ran from 2013 to 2023, albeit restricted to First Time Buyers.

But there are a few details about the scheme which remain unclear – in particular whether there will be a ceiling for property value. Help to Buy had a cap of £600,000, which when announced in 2013 was around twice the average new build London house price. By the time it ended in 2023, it was only around 20% higher.

Using data from London development specialists Molior, if this cap were applied to the Your First Home package, it would only give the prospective buyer access to an estimated 36% of homes currently for sale – with very strong concentrations in the east and south-east of the capital.

Given how conditions have changed since 2013, maintaining the £600k cap would seem inappropriate. Even based on the period since the last home under Help to Buy was started in early 2022, workplace-based incomes in London have risen by 31%, roughly in line with inflation as measured by RPI.

Applying these metrics to the £600,000 ceiling provides a new figure of £785,000. This increase changes our estimate of the proportion of homes to more than half (57%). A far greater range of locations are also accessible, including some of the more accessible locations in Inner London.

Nevertheless, the change is most dramatic in Outer London, where the proportion of homes accessible increases from 59% to 86% (Inner London increases from 18% to 34%). The maps below show the shift – and demonstrate the far greater choice that is now available.

The £785,000 figure may sound high but based on a 3.5x mortgage multiple, this requires a household income of circa £133,000 – equivalent to two workers at slightly less than the mean individual London workplace-based earnings (or, for example, one at the upper quartile and one at the 40th percentile). In other words, this is now not an unusual household income for the capital.

If this is the case, then, why is help required?

We are in a different world of interest rates from the period of Help to Buy. Not only is the cost of borrowing hugely higher but there is now a significant premium attached to low loan-to-value mortgages. To secure the best rates, a deposit of at least 20% – £157,000 for a £785,000 property – would be required. Given high rents, this would be very difficult for even those on the household incomes described here to save. So a stimulus is needed.

This would also make development in the capital far more viable and undoubtedly accelerate delivery. Construction starts in London remain at the lowest levels on record, with major implications for the city’s competitiveness and the wider housing crisis.

There are also concerns about economic scarring, with the supply chain potentially damaged long-term if low activity persists. This would make it harder for construction to recover once conditions improve creating further impact on delivery of new homes for the Capital.

London’s very specific problems – and the depth of its supply crisis – require more specific solutions, and as a minimum a higher cap in the capital is necessary if this policy is to have the impact the government wants.

The devil will be in the detail which will be unveiled next week – let’s hope the Emperor’s threads are genuinely visible!

 

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