Your First Home: a 2.5% deposit scheme - but will it help first-time buyers in Clapham, Brixton and Streatham?

A 2.5% deposit. For first-time buyers in South London that sounds too good to be true. So what did the Budget actually confirm?

So what's happening?

The government has confirmed a new £4.7 billion equity loan scheme called Your First Home. It aims to help around 70,000 households in England onto the ladder. What GOV.UK has published so far:

• You put down a deposit of at least 2.5%, up to a maximum of 15%.
• The government lends you 20% of the price as an equity loan.
• The rest is a repayment mortgage from a participating lender.
• The equity loan is interest free for five years, then 1.5% in year six and 3% from year seven.
• Household income must be £140,000 or less in London (£110,000 elsewhere).
• Price caps are £650,000 in inner London and £500,000 in outer London.
• It's for first-time buyers, for your main home, and only for new-build homes from developers signed up to the scheme.

Pre-registration opens by the end of December 2026, full applications from February 2027 and the first loans from April 2027.

The cold hard facts

Bear in mind it's an equity loan, not free money. If you borrow 20%, you pay back 20% of what the home is worth when you repay. GOV.UK's own example: buy at £300,000, borrow £60,000, and if the home is later valued at £320,000 you repay £64,000.

On a £500,000 new-build flat, that works out as:

• Deposit (2.5%): £12,500
• Equity loan (20%): £100,000
• Mortgage: £387,500

You still need to pass the lender's affordability checks, of course.

But what does it mean for Clapham, Brixton and Streatham?

You see, here's the thing. Most of what first-time buyers buy round here is second-hand: period conversions off Abbeville Road, flats on Brixton Hill, mansion blocks in Streatham. None of that qualifies. This is a new-build scheme, full stop.

Where it could matter is new-build in Battersea and Nine Elms, plus the odd new block in Brixton or Streatham, if the developer signs up and the price sits under the cap. Lambeth and Wandsworth should count as inner London, but the full list of local caps isn't published yet, so I'd wait for that before getting excited.

Two more Budget changes worth knowing

• Since 29 October 2026, you can use a Lifetime ISA on a home above the £450,000 cap with a 20% withdrawal charge instead of 25%. That's a real help in SW4, where £450,000 doesn't go far.
• From April 2029, a new First Time Buyer ISA replaces the Lifetime ISA for new savers: up to £4,000 a year, a 25% bonus and no upper age limit.

My take

It's a genuine leg-up for buyers who'd happily take a new-build flat. But it does nothing for the period stock most people in Clapham and Brixton actually want, and an equity loan that grows with your home's value is a debt you'll need a plan to repay. Take independent advice first.

So there you have it. Would you buy a new-build to get on the ladder with just 2.5% down, or hold out for a period flat? Drop me a line at jeroen@claphampropertyblog.com or call 07837 093554.

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Sources: GOV.UK, Budget 2026 and "Your First Home" guidance (MHCLG), 28 October 2026.