Andy Burnham announces new home scheme ‘Your First Home’ to help first time buyers/Image: Reuters
The evaluation estimated that around 15% of new-build homes constructed in England between 2013 and 2023 resulted from Help to Buy 1 and Help to Buy 2. Prime Minister Andy Burnham has announced a new Help to Buy-style scheme aimed at helping first-time buyers who have struggled to get on the property ladder without financial support from their families.
In an interview with the Guardian ahead of the Labour Party’s annual conference in Liverpool, Burnham said the programme was intended to help younger people facing difficulties entering the housing market. “Too many young people are struggling with housing, with many giving up hope on ever having a home to call their own,” Burnham said. “The evaluation found that the Help to Buy scheme had an overall positive impact on housing supply across England,” the report said. It also found a positive impact on construction jobs and described the scheme as representing “very high value for money”.
“So we are going to help more first-time buyers on the housing ladder, especially those who can’t call on the bank of mum and dad. You use AI every day. Now get your AI Quotient. Take the AIQ test.
The proposed programme follows the earlier Help to Buy initiative launched by George Osborne in 2013, when he was chancellor under then-prime minister David Cameron. The original scheme allowed first-time buyers to purchase new-build properties with a 5% deposit and a government-backed equity loan of up to 20% of the property’s value. The maximum loan was 40% for properties in London. Help to Buy ran until 2020 and supported more than 300,000 people in purchasing their first home.
The programme faced criticism from some industry experts, who argued that government-backed support could push up house prices and benefit developers. The review found that Help to Buy achieved its two main objectives of increasing access to home ownership and supporting housing supply. It estimated that the scheme generated around £25bn in social value at a cost of about £3bn.
However, an independent government evaluation published earlier this month gave a positive assessment of its overall impact.
Buyers will need to put down a minimum deposit of 2.5%, significantly reducing the upfront cost of purchasing a home. Income limits and a cap on applicants’ savings will be introduced to prevent people on higher salaries or with substantial deposits from accessing the support.
Under the proposed “Your first home” programme, eligible buyers will receive an equity loan worth 20% of the price of a new-build property, with an initial interest-free period. “‘Your first home’ will get them the keys to their own front door, and give builders the confidence to deliver the high-quality new homes the country needs,” he added. The announcement comes ahead of Labour’s annual conference in Liverpool, where Burnham is expected to set out his plans for delivering what he has described as “good growth in every postcode, hope in every heart”.
The scheme will be targeted at households that may struggle to buy without government assistance. There will also be price limits on properties that can be purchased through the scheme, restricting eligibility to more modest homes. The scheme is also intended to increase demand for new-build properties and support housing construction, as the government seeks to stimulate growth in the wider economy. It also follows a warning from the Bank of England that interest rates could rise later this year, potentially increasing borrowing costs for people seeking mortgages.