Highlights
- Households earning below £110,000 outside London and £140,000 in the capital are expected to qualify for the scheme.
- Buyers could purchase eligible new-build homes with deposits as low as 2.5 per cent, supported by government-backed equity loans.
- The scheme is intended to help middle-income households while supporting housebuilding, but its final eligibility rules are yet to be confirmed.
Teachers, nurses and other middle-income households could be among those eligible for Labour’s new first-time buyer scheme, which is expected to set annual household income limits of £110,000 outside London and £140,000 in the capital.
The Your First Home scheme will offer government-backed equity loans worth up to 20 per cent of eligible new-build properties in England bought from participating developers. The loans will include an initial interest-free period and are designed to help buyers purchase homes with deposits as low as 2.5 per cent.
The earnings thresholds are expected to be confirmed at next week’s Budget. The Times reported that ministers had initially considered lower limits of £90,000 outside London and £110,000 in the capital, before deciding that these would exclude too many middle-earning couples.
Who can qualify for the scheme?
Prime Minister Andy Burnham unveiled the scheme at last month’s Labour conference, saying it would focus on people who “really need support”.
Previous government-backed homebuyer schemes faced criticism for helping relatively wealthy households and pushing up property prices. Labour’s income limits are intended to target support more narrowly, although the proposed thresholds would still cover a broad range of earners.
The scheme is also intended to help the government increase housebuilding, after ministers conceded they were on course to miss their target of building 1.5 million homes in England by the next election.
Labour has said the programme will be funded from existing government budgets, but has yet to identify which areas of spending could be reduced. Developers participating in the scheme will also be asked to contribute towards its running costs.
The Home Builders Federation, which represents developers, has welcomed the plans and urged ministers to move quickly to establish the scheme.
The Conservatives have criticised the proposals as a “colossal admission of failure” over Labour’s housebuilding record. They have also warned that a new levy on developers could increase the price of new homes.
How the scheme compares with Help to Buy
The scheme is similar to Help to Buy, introduced under the Conservative-Liberal Democrat coalition government in 2013. That programme allowed buyers to put down a deposit of at least 5 per cent on newly built homes worth up to £600,000, with the government providing an equity loan of up to 20 per cent of the purchase price. The loan was interest-free for the first five years.
The original scheme ran until 2021 and was open to all home purchasers. A second version, which operated from 2021 to 2023, was restricted to first-time buyers and introduced regional price caps.
Unlike those earlier programmes, Labour’s Your First Home scheme is expected to include household income limits from the outset. The details, including the final thresholds and how developer contributions will work, are due to be confirmed at the Budget.
