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The government is set to introduce a new loan initiative designed to support first-time homebuyers, stipulating that households must earn below £110,000 to be eligible, with a higher threshold of £140,000 for purchases within London. These income caps, expected to be officially announced in the upcoming Budget, aim to target assistance more effectively. The scheme, named Your First Home, will provide equity loans covering 20% of the purchase price for new-build properties in England, offered through participating developers.
This new initiative allows buyers to secure properties with deposits as low as 2.5%, benefiting from an initial period during which no interest will be charged on the loan. Unlike previous government programs intended to aid first-time buyers, this scheme introduces salary limits to address concerns that former schemes enabled relatively affluent households to inflate property prices by borrowing beyond their means. Prime Minister Andy Burnham emphasized at Labour’s recent conference that the focus of Your First Home is to support those “who really need support,” reflecting the intent to prioritize genuine affordability.
Initial government proposals had set lower salary thresholds—£90,000 outside London and £110,000 in the capital—but these were reconsidered after recognizing that the limits might exclude many mid-income earners such as teachers and nurses. Alongside aiding buyers, officials believe the plan will encourage housebuilding, aiming to counteract the government’s acknowledgment that it will miss its target of constructing 1.5 million new homes in England by the next general election.
Funding for the scheme will come from the government’s existing budget allocations, though details about which sectors may face reduced spending remain unclear. Participating developers will also contribute towards the operational costs. The Home Builders Federation has welcomed the plans and called for swift implementation, while Conservative critics have described the initiative as an acknowledgment of Labour’s failures on housing delivery and have raised concerns that the new developer levy might increase new home prices. The program follows the model of prior Help to Buy schemes, which provided equity loans tied to property value fluctuations and initially offered interest-free periods. Earlier iterations allowed deposits of 5% on homes up to £600,000, with subsequent versions targeting first-time buyers and applying regional price caps
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