UK First-Time Buyers Scheme Could Cap Earnings at £140,000

What changed

The UK government is expected to cap household earnings for its Your First Home scheme at £110,000 outside London and £140,000 in London. The programme would offer first-time buyers in England a government-backed equity loan worth 20% of a participating new-build home, with deposits potentially as low as 2.5% and no interest during an initial period.

The limits are due to be confirmed at next week’s Budget. The government says the scheme will focus on households needing support while also helping housebuilders increase construction.

Why it matters

The income caps are an attempt to draw a line between help and excess borrowing. Earlier Help to Buy programmes were criticised for enabling relatively wealthy households to bid up prices, so the new limits are meant to keep the scheme from becoming a broad subsidy for buyers who could manage without it.

But £110,000 outside London and £140,000 in the capital still leaves room for many middle-earning couples, including teachers and nurses, who ministers feared would be excluded by lower thresholds. The trade-off is clear: tighter limits may reduce the risk of simply adding more purchasing power to the housing market, while wider limits make the scheme more useful to households facing high prices.

The loan is tied to the value of the property, so buyers will share in changes to the value of the new-build home. That makes the scheme more than a cheap deposit boost: it links public support to the eventual performance of the property.

The unresolved question is how the programme will be paid for within existing government budgets, and how much participating developers will contribute to its running costs. Those details, alongside the final salary caps, will determine whether this is a targeted housing measure or another large demand-side intervention with a new name.