Burnham announces equity loan scheme for first-time buyers in bid to boost housing market | News

Andy Burnham has announced that the government will launch a new first-time buyer scheme in October’s budget.

Speaking on the eve of Labour’s annual conference in Liverpool, the prime minister committed to a new equity loan scheme for England, which he called ‘Your First Home’.

The policy is expected to support 2.5% deposits, backed by 20% government-backed equity loans for prospective buyers purchasing a new build property from a developer signed up to the scheme. People will be able to access the loans with an initial interest free period.

The scheme will also set a household income cap, with local property price caps, to ensure it is targeted at those on lower incomes.

The Ministry of Housing, Communities and Local Government (MHCLG) said the scheme would help first-time buyers get onto the property ladder, while stimulating housing supply.

Housebuilders have for some time been calling for a demand-side stimulus from the government along the lines of a previous equity loan scheme known as Help to Buy.

The initial version of that policy, which was aimed at all purchasers, ran from 2013 to 2021, before being restricted to first-time buyers and then abandoned in 2023.

A recent independent evaluation of Help to Buy for MHCLG found it delivered “very high value for money” for taxpayers and provided a boost to housing supply that went beyond the homes sold through the scheme.

However, critics of the policy argue that it inflates property prices, with housing developers soaking up the stimulus through price rises.

“Too many young people are struggling with the cost of housing, with many giving up hope of ever having a home to call their own,” said Burnham.

“So we will step in to help more first-time buyers onto the housing ladder.”