Helping first-time buyers onto the property ladder is one of those government promises that tends to engender immediate and rapturous approval. Working out how to do it is another matter entirely.
The deposit a buyer requires – and the difficulty saving for that deposit – is one of the principal barriers to entry. Government help by way of an equity loan to bridge the gap and reduce the deposit needed is one option.
By reducing the deposit requirement, homeownership could potentially be opened up to thousands of people; people who can demonstrably afford monthly mortgage payments but simply cannot accumulate a large enough lump sum whilst simultaneously paying rent.
The problem lies in the risk that, by increasing people’s ability to buy homes without increasing the number of homes available, prices can simply be pushed upwards.
That is the balancing act facing the Government with its newly announced Your First Home scheme.
And if the principle itself sounds familiar, it should.
How will Your First Home work?
The Government announced its new Your First Home scheme this week, although the full details will not be confirmed until the Budget on 28 October, 2026.
What we do know is that the scheme will apply in England and is expected to allow eligible first-time buyers purchasing a new-build property to do so with a deposit of just 2.5%.
That will be supported by a government-backed equity loan of up to 20% of the property value, initially interest-free.
There will also be household income limits and local property price caps, although we do not yet know where those limits will be set.
Crucially, participating developers will also be expected to make a financial contribution towards the cost of the scheme.
If some of this is beginning to sound familiar, that is because many of the principles resemble the previous Help to Buy equity loan scheme.
Help to Buy did more than help buyers
The ‘Help to Buy’ scheme was introduced in 2013, at a very different point for the housing market.
Similarly, it also offered buyers a government equity loan of up to 20% of the purchase price outside London, while enabling them to buy a newly built home with a relatively small deposit.
Whatever your view of the scheme, its scale is difficult to dispute.
Between 2013 and 2023, 387,195 properties were purchased using a Help to Buy equity loan, of which more than 328,000 were bought by first-time buyers.
Nevertheless, its significance went beyond those individual purchases.
A Government-commissioned evaluation of Help to Buy, published this September, concluded that around 15% of new builds over the lifetime of Help to Buy were attributable to the scheme. It found that Help to Buy helped restore confidence among developers, particularly during its earlier years, encouraging development at a time when the market was still recovering from the 2008 financial crisis.
This is relevant because stimulating housebuilding does appear to be one of the objectives of Your First Home too.
Anything that gives housebuilders greater confidence that the homes they build can actually be sold has the potential to encourage more construction. Developers do not simply decide how many homes to build based upon theoretical housing need; they also have to consider whether there will be buyers able to purchase them.
Reducing that sales risk could therefore make a difference.
But the new proposal hasn’t landed without raising a few questions.
The Government has already said developers joining the Your First Home scheme will be expected to contribute towards its costs.
We do not yet know, however, what that contribution will look like.
It is too soon to say whether housebuilders will absorb it, whether it will affect land values or margins, or whether some of the additional cost could ultimately find its way into the price buyers pay – perhaps amounting to an additional new home premium.
That last possibility is particularly worth watching.
The recent Government evaluation of Help to Buy concluded that the old scheme was likely to have contributed to slightly higher property prices in some areas. Its analysis also identified a Help to Buy premium amounting to around 1% above the price of comparable new-build properties that were not bought through the scheme.
That does not mean the same thing will happen this time. It may also surprise detractors, who may think that the Help to Buy scheme was responsible for much more inflated premiums than this reported 1%.
In any case, as far as the scheme goes, its eventual design could be materially different.
It nevertheless demonstrates why the detail matters.
What about negative equity?
There is another obvious risk when somebody buys with a deposit of only 2.5%.
If property prices fall soon after the purchase, the buyer has very little personal equity to cushion that fall.
Negative equity is therefore a possibility, so we also need to understand how the equity loan is to be repaid if property values do drop.
But it is also worth maintaining some perspective here. Property values can fall whether somebody purchases with government assistance or not. Buying a home has always involved an element of market risk, particularly over a short period.
The question for so many first-time buyers is, what is the alternative? Continuing to rent for years whilst still trying to save at the same time? For some, especially with rents as they are and without help from family, that feels an impossible challenge, and what are the implications in the meantime? It’s all well and good lecturing our young people to make sacrifices, but do we really appreciate what those sacrifices mean?
That is why I think the principle deserves a fair hearing.
If someone has a secure income, can pass appropriate affordability checks and can comfortably sustain the cost of owning their home, should the inability to accumulate a large deposit necessarily prevent them from buying?
For some, Your First Home could bridge precisely that gap.
Could it eventually go further?
Initially, Your First Home is specifically being designed for first-time buyers purchasing qualifying new-build properties from participating developers.
Personally, I would be interested to see whether something broader could eventually be considered.
The original Help to Buy scheme was initially available not just to first-time buyers but to existing homeowners purchasing a new-build home too. Restricting assistance makes sense if public resources are limited and the Government wants to target those currently unable to access homeownership.
But if one of the wider aims is also to stimulate new housing development, there could eventually be an argument for allowing a wider group of purchasers to participate, perhaps with an appropriate maximum property value.
For now, however, that is not what has been announced.
The detail will decide whether it works
I am generally encouraged that the Government is seriously looking at ways to help people buy while also supporting the construction of more homes. I confess to an added interest given where our estate agency is based, here in the centre of Edgware, earmarked as it is for a major town centre redevelopment, including well over 3,000 new homes.
Your First Home could therefore be a scheme that helps local first-time buyers. That does not mean we should accept it without scrutiny.
We need to know the income thresholds and how local price caps will be set. We need to understand the terms of the equity loan after its initial interest-free period. We need to see what contribution developers will be required to make and whether that cost is likely to turn up in the general resale economics of new developments.
Buyers need to understand something fundamental, too: a smaller deposit makes purchasing more accessible but does not remove the normal risks associated with owning property.
We trust that such detail will become clear at the Budget.
Until then, perhaps the most interesting lesson comes from the scheme Your First Home most closely resembles.
Help to Buy was imperfect. But it also helped hundreds of thousands of people buy homes and, according to the Government’s own latest evaluation, resulted in considerably more homes being built.
If Your First Home can learn from the weaknesses of its predecessor while retaining those benefits, bringing back an old idea might turn out to be no bad thing at all.