New first-time buyer scheme to be confirmed at Budget

[sbplanet]

"The government has today (Saturday 26 September 2026) announced a new equity loan scheme - Your First Home - in England will be confirmed at next month’s Budget, to support more people into homeownership.

This is expected to support 2.5% deposits, backed by 20% government-backed equity loans, for prospective first-time buyers purchasing a new-build property from a developer signed up to the scheme.

People will be able to access equity loans with an initial interest free period, meaning that those who use the scheme could save hundreds of pounds per month compared to a 95% mortgage.

The Your First Home scheme will help tackle the deposit barrier for first-time buyers who would be unable to afford their first home otherwise, building on the government’s existing work to help more young people and families onto the housing ladder. The scheme will also set a household income cap with local property price caps to further ensure support is targeted at those who need it, the detail of which will be set out at Budget.

With the new build housing market currently facing challenging headwinds driven by international economic pressures and rising construction costs, the scheme will also act as a much-needed stimulus to support the market and boost housing supply.

Developers will be expected to make a contribution when signing up to the scheme to help cover costs.

Further details, including costs and implementation timelines, will be announced by the Chancellor at the Budget next month. "

https://www.gov.uk/government/news/new-first-time-buyer-scheme-to-be-confirmed-at-budget

It won’t be “fairly priced” because the developers will hike prices now they know the buyers are getting incentivised and have more money to spend. Anyone who thinks developers won’t hike prices is incredibly naive.

How is that any different than otherwise? We bought 2017, no gov help, and sold 2024 at a loss because the market had gone down. So we were out of pocket. That’s a risk in property.

In the interim they / we had a home. So the loss can be considered to have paid for that. Otherwise rent would’ve been a factor and landlord whims.

Most people do share their accomodation. Rent of a bedroom near me is £900 a month.

Yes, but you covered your own debt interest. With this scheme 20% of the debt interest is being pushed onto the taxpayer for 5 years. Just so that builders and lenders profits dont have to settle to match affordability. Its nuts.

Its ok for the public to be squeezed from all angles and not have the disposable income that they used to enjoy. But we cant allow that to effect banking and developers profits now can we ? That would just be unreasonable. Sigh

Exactly why are older houses never allowed!

Govt wants to expand housing stock by motivating builders to build more, not simply get the people moving.

One reason might be to get rid of some of the shoebox new build flats currently on sale and have been for ages.

In my area, there are so many empty flats. Almost every flat that you look at on rgihtmove are unoccupied according to the pictures. The last thing we need is more new flats.

-A 2.5% deposit is tiny and offers no protection against falling house prices.
-The scheme is only available for new builds in order to protect the government's incomes corporate mates, not FTBs. See how house builder shares have risen slightly v recently and are likely to rise more, having been very depressed for some time.
-The price of a new build falls as soon as it is bought, the same as a new car.
-This means that, even without falling house prices, the FTB will be in negative equity immediately.
-Housebuilders will increase prices as soon as this scheme comes in. This happens every time the government interfere in the market in this way. This means that FTB will inevitably overpay, putting them at even more financial risk from the artificially inflated price.
-The reduced interest rate for the first 5 years will make people feel that they can borrow more than they can afford.
-When the 5 years ends, a lot of these FTB are likely to be in negative equity and there is a good chance that rates will be high, higher than they are now. Some, perhaps a lot of them, will therefore be unable to afford the mortgage/be unable to remortage and be in significant financial difficulties.
-Overall, the housing market is likely to fall now for several years.

Your adult DC might want to look at MovingHomewithCharlie on X/twitter.

Labour want to show that more homes are being built, atm it’s the opposite as builders refuse to build as they can’t shift current stock.
They hope this scheme will help them to show they are fulfilling election promises. As simple as that.

Which is what our son is doing. But what about those who can't? One of his friend's parents have downsized whilst he was at uni! He has no choice but to go out on his own. He's in a HMO but it's costing him £900/month!

Excellent post. Sums it up very well.

@Badbadbunny I don’t know if you know how planning works, but areas in towns are zoned. Some is zoned for housing, some for offices or industry and some for retail. When a sector is vacated (say retail) the owners have to get the use changed by the planning authority from retail to residential. In my area, it’s easier to fly to the moon! The planning authority is very slow to react to changing needs. It’s very obvious many towns don’t need the size of retail space that they have. However planning authorities and councils just sit there and do nothing.

I think John Lewis wanted some of their old stores to become residential zones. I’m not sure if any of them have. It’s a prime reason why high streets are too big and residential areas are too limited for demand. Not everywhere of course but using these brownfield central sites should be preferred over green field sites on the edge of town.

Thank you @rainingsnoring

Additionally, if you want to sell in, say, eight years and your property has increased in value, you will have to pay back that loan as well as the interest that loan would have accrued thus cutting into any profit you’ve made and putting you in a really shit situation for your onward purchase. If the property has decreased over eight years and you want to sell, you’re screwed, especially if you can’t pay the mortgage.

I hate it when the government interferes with the housing market! It usually means prices go higher.

I know this is just my account and the housing market is different today, but I used the old version help to buy about 9 years ago and it was really positive for me.
I was solo renting a couple of years after finishing uni and a relationship break up. I managed to scrape together a 5% deposit for a new build which the scheme topped up to 25% interest free for 5 years.
The mortgage was £100s a month cheaper than the rent I was paying. I’d never have been able to save more at that point renting, so this was the only realistic way for me to get out.
I live in a cheap midlands market town so while the little new build came with a premium price tag, about £20k higher than a similar older property, it more or less held its value for the first few years and then increased in line with the market. I knew I wouldn’t need to sell in a short period so was fine to wait this out.
With the difference in what I’d been paying in rent, I was able to pay the majority of the loan off after the 5 year interest free period and remortgaged to cover the final part.
I sold the house after 7 years and walked away with a decent chunk of equity to buy with my husband.
I wanted to add this as I understand the wider concerns with the schemes but for people who are looking at this for themselves or their children, depending on your specific circumstances and location, I wouldn’t write it off completely.

Or they could just you know… reform leasehold and ditch stamp duty so that FTB can buy a flat as a starter home and then upsize a few years later without the penalty of stamp duty and the risk of insane service charges.

Whilst I do agree with lots of the comments on here, I just wanted to offer an alternative view from someone who bought under help to buy and it worked out really well for in 2014:

We bought a new build 3/4 bedroom home with the maximum interest free equity loan and a small deposit. Mortgaged for 5 years at a low rate*

The house was bigger than we needed at the time but it meant we wouldn't outgrow it in the short term. Pros were space (small foot print but over 3 floors so lots of space), NBHS, sound proofing and despite general opinion, pretty good build quality. Cons were small garden and feeling like we were a satellite estate to the nearest town, area was fine but not out ideal, the management fees which we were beholden to without say).

After the 5 years interest free, we remortgaged to cover the government loan without it adding too much to the mortgage.

We sold in 2021 and were able to buy our current house (not new build) which is bigger and in a lovely area, great transport links and a big garden. It was just under double what we paid for the new build and will be our home for the long term if not forever. Because we remortgaged to cover the equity loan, we had a bigger deposit so could access better interest rates.**

• DH and I live just outside the home counties, and at the time, where we bought (and still live albeit in a different house) was much cheaper than the next county over. Now, in fairness, the prices are still lower than the fringe counties to London, but you'd probably need to go another county over to get comparable price. Also mindful that the interest rates were lower.

** A massive mistake here was only fixing for 5 years not 10 as our rate just jumped from 1.49 to 4% which was painful!

So yes, I think there is an argument we were lucky with timing, but there are circumstances when these schemes are helpful and work

I couldn't agree more with this assessment of whats going on.

@KDHD Rhe schemes work in an inflationary market. In falling or difficult market, they are problematic as the loan exceeds the value. As someone I know has discovered, paying back the loan is a bureaucratic nightmare!

There is no way that would work. The cheapest new build 2 bed in my area is £450,000 but you can get other 2 beds for £325,000- £350,000 the stamp duty would be more too.

Took the words right out of my mouth.

Plus learning to save for a deposit is important.

Ate you talking about houses? This scheme is for new build homes which include flats.

A house, which is what my DD is hoping to buy next year with her partner