The government is set to introduce strict earnings thresholds for its upcoming “Your First Home” scheme, with households required to earn under £110,000 annually to qualify. For properties located in London, the income limit is increased to £140,000. These specific caps are expected to be officially confirmed during next week’s Budget.
The initiative provides government-backed equity loans covering 20% of the cost of new-build properties in England. Designed to assist those who “really need support,” according to Prime Minister Andy Burnham, the scheme allows for initial deposits as low as 2.5%. Participants will also benefit from an initial interest-free period on the equity loan portion.
Ministers initially considered lower income limits of £90,000 outside London and £110,000 for the capital. However, officials concluded those figures would unfairly exclude middle-earning professionals, such as nurses and teachers, from accessing the support. The policy is intended to help stimulate housebuilding after the government conceded it will likely miss its target of constructing 1.5 million homes by the next election.
While Labour has committed to funding the project through existing budgets, they have yet to disclose which other areas of public spending will face reductions. To supplement the funding, developers participating in the program will be required to contribute to its ongoing running costs. The Home Builders Federation has expressed support for the plans and urged the government to implement the initiative without delay.
The structure mirrors the previous “Help to Buy” program, which utilized equity loans tied to property value fluctuations.
The original Help to Buy, running from 2013 to 2021, allowed buyers to place a 5% deposit on new homes valued up to £600,000, with a 20% interest-free loan for the first five years. That scheme, which initially ran between 2013 and 2021, enabled all home purchasers to put down a 5% deposit on a newly built home worth up to £600,000.
A successor program from 2021 to 2023 later refined these rules by introducing regional price caps and restricting eligibility to first-time buyers. Previous schemes to help first-time buyers did not restrict eligibility by income but faced criticism for stoking house prices by allowing relatively wealthy households to borrow more. Which ran from 2021 to 2023, restricted access to first-time buyers and applied regional-level price caps to the properties could be bought under the programme, a second version of that scheme.
Political opposition has been swift, with the Conservatives labeling the new proposal a “colossal admission of failure” regarding Labour’s housing delivery track record. Critics have also voiced concerns that the associated developer levy could inadvertently drive up the overall cost of new-build properties.
