Prime Minister Andy Burnham is reportedly planning to revive a scheme similar to the previous Help to Buy initiative, with the new program named "Your first home." This announcement is expected at Labour's annual conference in Liverpool and aims to address the slowdown in the housing market and support the government's target of building 1.5 million new homes over five years.
The "Your first home" scheme will offer first-time buyers in England a 20% equity loan for new-build properties, with an initial interest-free period. Buyers will need a minimum deposit of just 2.5%. The scheme is specifically designed for those with regular incomes who struggle to save for a large deposit or lack family financial support. To ensure it targets those most in need, household income caps, deposit caps, and property price caps will be implemented, excluding high earners and those with substantial savings.
This move comes amid concerns that low housebuilding rates could jeopardize Labour's housing targets and potentially lead to downgrades in Office for Budget Responsibility projections, impacting growth forecasts. A recent government review deemed the previous Help to Buy scheme "very high value for money," having supported over 300,000 first-time purchases and contributing to one in seven homes built in England from 2013-2023. However, critics of the former scheme argued it inflated house prices.
Discussions have already occurred between housing officials, then-housing secretary Steve Reed, and housebuilding executives regarding the operation of a new equity scheme. The Home Builders Federation has also proposed a new equity scheme incorporating lessons from past interventions. Further details, including costs and implementation timelines, for "Your first home" are anticipated to be announced at the upcoming Budget by Chancellor John Healey.
Developers who sign up for the scheme will be expected to contribute to its costs. This initiative is seen as a stimulus for the new-build housing market, which is currently facing challenges due to international economic pressures and rising construction costs. The government aims for the scheme to tackle the deposit barrier for first-time buyers who would otherwise struggle to afford their initial home.
