The government is preparing to introduce a new scheme aimed at helping more first-time buyers in England overcome the biggest hurdle to homeownership: raising a deposit.
The Your First Home programme is expected to be confirmed by Chancellor at next month’s Budget. Under the proposed scheme, eligible buyers could purchase a newly built property with a deposit of as little as 2.5%, supported by a government-backed equity loan worth up to 20% of the purchase price.
The initiative is designed for first-time buyers purchasing new-build homes from developers participating in the programme.
A key feature will be an initial interest-free period on the government equity loan. Ministers say this could significantly reduce monthly housing costs compared with taking out a conventional mortgage covering 95% of the property value, potentially saving eligible households hundreds of pounds each month during the initial period.
The government says the scheme is intended to address the deposit barrier faced by people who can afford monthly mortgage payments but struggle to accumulate enough savings for a traditional deposit.
Eligibility will not be universal. The programme is expected to include household income limits and regional property-price caps, with the precise thresholds due to be announced in the Budget. The government says these restrictions are intended to concentrate assistance on households that would otherwise find it difficult to buy their first home.
The initiative is also being presented as a measure to support England’s housebuilding sector. The new-build market has been under pressure from higher construction costs and wider international economic uncertainty, while developers have faced challenges maintaining construction levels.
By stimulating demand for newly built properties, ministers expect the scheme to provide additional support to developers and contribute to housing supply.
Developers wishing to participate will also be required to make a financial contribution towards the cost of the programme.
The government has not yet published the final cost of the scheme, the precise eligibility rules or the date on which applications will open. Those details, together with the implementation timetable, are expected to be announced by the Chancellor at the October Budget.
The announcement forms part of the government’s broader efforts to increase access to homeownership and support younger households and families seeking to enter the property market.
