The government has unveiled an earnings-based scheme to help first-time buyers purchase new-build homes in England with deposits as low as 2.5%. Households will need to earn less than £110,000 to qualify for the Your First Home scheme, or £140,000 for properties bought in London, according to reporting by The Times. The scheme will offer government-backed equity loans worth 20% of new-build properties purchased from participating developers, with an initial interest-free period on the borrowed amount. Prime Minister Andy Burnham unveiled the scheme at last month's Labour conference, saying it would focus on those who "really need support". Full details of the changes, including the salary caps, are expected to be confirmed at next week's Budget.
The earnings limits represent a shift from the government's initial thinking. The Times reported that ministers had first decided to set the earnings thresholds at £90,000 for homes outside London and £110,000 in the capital, before concluding this would exclude too many middle-earning households such as teachers and nurses. Unlike previous first-time buyer schemes which did not restrict eligibility by income, this approach is designed to prevent wealthy households from accessing support and avoid stoking house prices.
The scheme echoes the Help to Buy programme that ran under the previous Conservative-Liberal Democrat coalition government. That earlier scheme initially operated between 2013 and 2021, allowing home purchasers to put down a 5% deposit on newly built homes worth up to £600,000, with up to 20% of the cost funded by a shared equity loan that was interest-free for the first five years. A second version ran from 2021 to 2023, restricting access to first-time buyers and applying regional price caps.
The government has argued the Your First Home scheme will help boost housebuilding, after ministers acknowledged they are set to miss a target to build 1.5 million homes in England by the next election. Labour said the scheme will be funded within existing government budgets, though has not yet provided details of which other areas will see spending cuts. Developers taking part will also be asked to contribute towards running costs. The Home Builders Federation, representing developers, has welcomed the plans and urged the government to move quickly to set up the scheme. The Conservatives have branded the proposals a "colossal admission of failure" of Labour's housebuilding record and expressed concerns that the new developer levy could push up the price of new homes.