Burnham announces scheme to help first-time buyers onto housing ladder

New equity loan plan aims to lower the deposit barrier for first-time buyers

Ninoda.com – Prime Minister Andy Burnham has unveiled plans for a new housing scheme designed to help more first-time buyers in England purchase newly built homes with a smaller upfront deposit.

The proposed programme, called Your First Home, would allow eligible buyers to buy a new-build property with a deposit of 2.5%. The government would offer an equity loan worth 20% of the property’s value, reducing the amount that buyers would need to finance through a mortgage.

The announcement was made as Burnham travelled to Liverpool for his first Labour Party conference as prime minister. More details are expected in next month’s Budget, while pre-registration for the scheme is due to begin before the end of the year.

Support aimed at buyers without family financial help

Burnham said the policy is intended to assist people who cannot rely on financial backing from relatives, often described as the “bank of mum and dad”. For many aspiring homeowners, raising a deposit remains one of the largest obstacles to buying a property, particularly while housing costs continue to place pressure on household budgets.

“Too many young people are struggling with the cost of housing, with many giving up hope of ever having a home to call their own.”

“So we will step in to help more first-time buyers onto the housing ladder.”

Labour said the equity loan would include an initial period during which no interest would be charged. The length of that period, along with other operating details, has not yet been confirmed.

Ministers have also not set out whether applicants will face an age limit or whether the scheme will apply only to homes below a specified price. Those decisions could be significant in determining how widely the programme is available across England, where house prices vary sharply between regions and local areas.

How the proposed scheme would work

Under the plans, a buyer would provide a 2.5% deposit and receive an equity loan equal to one-fifth of the value of a qualifying new-build home. The remainder would generally need to be covered by a mortgage.

For prospective purchasers, the structure could reduce the immediate savings required before making an offer. However, an equity loan means the government would hold a stake linked to the property’s value, so buyers would need to understand the repayment terms once they are published.

Burnham said the measure should also encourage housebuilders to increase supply by giving them greater certainty that potential buyers will be able to afford new homes.

“We will give builders the confidence to deliver the high-quality new homes the country needs.”

The scheme is expected to be funded through changes to existing government spending priorities. Housing developers would contribute towards the costs of running it.

Lessons from earlier home-buying schemes

Your First Home shares features with previous government initiatives, most notably Help to Buy. Introduced in 2013 under the coalition government by then-Chancellor George Osborne, Help to Buy built on an earlier programme called FirstBuy, which was specifically focused on first-time purchasers.

At its launch, Help to Buy allowed buyers of newly built homes to put down a 5% deposit. A shared-equity loan could cover up to 20% of the property price and was interest-free for the first five years. The new Labour proposal would begin with a lower required deposit, at 2.5%, while retaining the basic approach of a government-backed equity loan.

Housing Secretary Angela Rayner said the new initiative would use experience gained from earlier schemes while keeping their useful features.

“We’re delivering a new generation of equity loans in a Labour way, targeting support to those first-time buyers who need support the most.”

The emphasis on targeting will be closely watched once eligibility rules are published. Limits based on income, property price, location or previous ownership could all affect which households benefit and how much demand the policy generates.

Housing supply remains a wider challenge

The announcement comes while the government continues to pursue its target of building 1.5 million homes in England by the next election. Rayner has said there is only a “slim chance” of reaching that goal, although she has insisted that the government has not abandoned it.

Figures available up to June indicated that construction was not progressing at the rate required to meet the target. Housebuilding companies had previously warned that the 1.5 million-home ambition was overly optimistic, while analysis has shown that the number of new homes being built fell during Labour’s first year in office. That decline continued a downward trend that had begun under the Conservatives.

For first-time buyers, assistance with deposits can make a difference only where suitable homes are available to purchase. The government’s plan therefore links demand-side support for buyers with its wider effort to encourage more building, especially in the new-build market.

Until the Budget provides fuller rules, potential applicants will not know whether their preferred property, income level or personal circumstances would qualify. But the proposed 2.5% deposit threshold and 20% equity loan indicate that the government wants to make home ownership more accessible to people who have struggled to save while paying the high costs of renting and everyday living.