UK Prime Minister Andy Burnham announced a new homeownership scheme called “Your First Home” as he arrived in Liverpool for the Labour Party’s annual conference. Under the scheme, first-time buyers in England would need a deposit of just 2.5%, with the government providing an equity loan worth 20% of a new-build property’s value. The equity loan would be interest-free, at least initially. Full operational details are due to be set out by Chancellor John Healey at the Budget on October 28.
Using Rightmove’s average first-time-buyer home price of £230,000, This is Money calculated that a buyer could put down a deposit of £5,750 and access a loan of up to £46,000. Burnham said the scheme is aimed particularly at people “who can’t call on the bank of mum and dad” — those without family help toward a deposit. Funding is expected to come from reprioritising existing government budgets, with housing developers also contributing toward running costs.
The scheme revives the shared-equity model of Help to Buy, introduced in 2013 and run until 2021 (with a restricted second phase to 2023). A government evaluation found more than 387,000 properties were purchased through Help to Buy, of which 328,000 were by first-time buyers; it was “effective in supporting people into home ownership in some areas, but did not remove affordability barriers for first-time buyers in areas that were already relatively expensive,” the evaluation concluded. Housing Secretary Angela Rayner said Your First Home would “build on the lessons learned from previous schemes, while retaining the benefits.”
Two details that shaped Help to Buy’s design remain unconfirmed for the new scheme: BBC News reports ministers have not yet said whether Your First Home will carry an age restriction, or a price cap on eligible properties (the earlier Help to Buy scheme capped eligible new-build homes at £600,000). Both are expected to be clarified at the October Budget. Shadow Housing Secretary Katie Lam criticised the plan, warning it would leave first-time buyers “taking on even more debt” and that a developer levy “risks pushing up the price of new homes too.”
References
BBC News – Burnham announces scheme to help first-time buyers onto housing ladder / This is Money – Government revamps Help to Buy with a new plan aimed at first-time buyers who have no ‘Bank of Mum and Dad’
