Most new builds don't fit the new price caps

Good morning,

A month ago I promised to revisit Your First Home once the details landed. On Tuesday, the government published price caps for all 296 council areas in England.

So I downloaded every home sold in England last year and checked which new builds would actually qualify.

The answer surprised me.

Let’s dive in.

In this newsletter, you'll find...

• The 30-second recap

• What I found

• Feedback

The 30-second recap

You put down 2.5%. The government lends you 20% as an equity loan, repaid when you sell, rising or falling with your home's value. A normal mortgage covers the rest.

It starts in April 2027 and it's for new builds only (Savills).

Each area has a price cap, the most a home can cost and still qualify for the scheme. Caps run from £215,000 in North Lincolnshire to £650,000 in inner London.

They're based on the median price in each area, meaning the middle price of all homes sold there (Evening Standard).

Quick one that trips people up: the cap is not a limit on what builders can charge. A developer can still list a new build at £400,000 in an area with a £300,000 cap, and another buyer can buy it.

The cap only decides whether you can use the scheme on that home. Under it, you can. Over it, you'd need a normal deposit and mortgage.

Think of a voucher that only works on items under a set price. The shop charges what it likes. Your voucher just won't work on the pricier stuff.

Now spot the problem. The cap is based on all homes. The scheme only lets you buy new ones.

What I found

I matched 52,336 new-build sales in England from 2025 to their local cap.

• Only 40% of new builds sold at or under the cap.

• For second-hand homes, it was 63%.

• New-build flats did fine: 61% fit. New-build houses: just 36%.

In 152 of the 176 council areas with at least 100 new-build sales, the middle-priced new build cost more than the cap.

Why?

The new-build premium, the extra you pay because a home is brand new. The typical new build sold for £365,000 last year, against £300,000 second-hand.

Most homes sold are second-hand, so the caps mostly track second-hand prices. New builds don't.

The twist nobody expected

You'd assume the scheme works best in cheaper northern towns. The data says the opposite.

Look at Sunderland. The typical second-hand home sold for £150,000. The typical new build sold for £290,000, nearly double, against a £235,000 cap.

Here's why. In Sunderland, 99% of new builds sold last year were houses. In Greenwich, 94% were flats. Flats are cheaper, so they fit under the cap. Family houses don't.

In my Help to Buy issue, I said the North East maths looked decent. It still does for homes that fit. There just aren't many.

(My workings: HM Land Registry Price Paid Data for 2025, standard sales only, joined to the GOV.UK caps list. Typical prices, not like-for-like homes, and some late-2025 new builds may not be registered yet.)

So what do you do with this?

If you're a first-time buyer:

1. Look up your area's cap before you fall in love with a show home.

2. Expect a flat or a smaller house. Most new-build houses won't fit.

3. Compare it with similar second-hand homes nearby. A big gap is the premium.

If you're an investor:

1. Where lots of new builds fit (Greenwich, Newham, Birmingham, Liverpool), expect more first-time buyers chasing new-build flats from April, and more competition for you.

2. Many of those buyers are renters today. Watch demand for one- and two-bed rentals nearby.

3. Where almost nothing fits, the scheme changes very little.

The bottom line

Same scheme. Very different deal depending on your postcode.

The cap says what a modest home should cost. The Land Registry says what new homes actually cost. In much of England, they don't agree.

Is there a new build under the cap where you live? Hit reply and tell me. I'd genuinely like to know.

That's the data. You make the call.