The government’s proposed Your First Home scheme addresses a problem we hear about repeatedly: people who could afford monthly mortgage payments but cannot save a large deposit while paying rent.
Under the government’s announcement, first-time buyers purchasing an eligible new-build home in England could put down as little as 2.5%, alongside a government-backed equity loan of 20%. That could bring ownership closer for households without help from the bank of mum and dad.
It could also help get homes built. Developers need confidence that buyers will be there when a development is finished. According to the Home Builders Federation’s Housing Pipeline report, only 1,220 private housing sites gained planning permission in England in the first quarter of 2026 – the lowest quarterly figure in its dataset, which began in 2006. Separately, government planning statistics show that permission was granted for 212,000 homes in the year to June 2026, down 12% on the previous year. Stronger demand could give builders confidence to proceed, although the scheme cannot by itself solve the shortage of sites coming through planning.
We welcome the government’s expectation that participating developers will contribute towards the scheme’s costs. It is fair that an industry benefiting from increased sales should help pay for it. But the size of that contribution, the scheme’s overall cost and the government’s financial exposure have not yet been published.
LEARN FROM HELP TO BUY
Help to Buy shows both the promise and the risks of an equity-loan scheme. An independent evaluation commissioned by the Ministry of Housing, Communities and Local Government found that 46% of customers said they could not have bought a home without it. The evaluation also found that the scheme increased housing supply, with developers reporting that stronger demand gave them confidence to build.
But the same evaluation found that Help to Buy customers paid about 1% more than buyers of comparable new builds. New builds themselves cost around 5.5% more than comparable existing homes during the period studied, with the new-build premium around 8–9% in London.
One part of the evaluation, comparing areas near the England–Wales border, estimated that Help to Buy raised overall house prices there by about 2%.
The wider price effect is less certain, but the warning is clear: government support must not become an excuse to charge buyers more.
The mortgage environment has changed too. The Bank of England’s records show Bank Rate was 0.1% for much of 2021; it was held at 3.75% in September 2026.
Bank Rate is not the mortgage rate a buyer pays, but it underlines why affordability must be tested using today’s borrowing costs. A smaller deposit does little good if the monthly mortgage payment is out of reach.
The government should therefore compare the prices paid by scheme buyers with similar new builds and existing homes, and publish how many additional homes are built as a result. Local property price caps must not become prices for developers to aim at.
LONDON CALLING
London is a particularly demanding test. The previous Help to Buy scheme offered an equity loan of up to 40% in the capital; the new proposal is for 20%. According to HM Land Registry’s July 2026 House Price Index, the average London first-time buyer paid around £467,000. At that price, a 2.5% deposit would be roughly £11,700, but the buyer would still need a mortgage of about £362,000.
At an illustrative 4.5-times-income borrowing limit, that mortgage would require a household income of roughly £80,000, before a lender considers other commitments or a flat’s service charge.
The deposit is only one part of the affordability problem.
We do not yet know the proposed household income or local property price caps.
If they are set too low, Londoners could qualify for the scheme but be unable to afford an eligible home – or afford a home but be excluded by the income cap.
The government should test the caps against actual local new-build prices and mortgage lending limits. It should also consider whether London needs a higher equity loan, while weighing that against the risk of pushing prices up.
“There is a risk for buyers putting down very small deposits.”
There is a further risk for buyers of new-build flats putting down very small deposits. HM Land Registry’s July index shows that London flat and maisonette prices fell 6.6% over the preceding year, compared with a 3.3% fall across all London properties. A modest fall in value could wipe out a buyer’s small initial stake.
High or rising service charges, building safety concerns and onerous lease terms can also make a flat harder to afford, remortgage or sell.
Helping people buy flats while leaving leasehold problems unresolved would be short-sighted. We welcome the commitment to bring forward the Commonhold and Leasehold Reform Bill before Christmas, including powers to cap excessive administration and permission fees. T
he government must now move quickly to implement its full leasehold reform programme, including stronger transparency and control over service charges.
The exit matters as much as the entry. Some Help to Buy owners told the independent evaluators that repaying their equity loan when they wanted to sell was costly and stressful.
They described valuation deadlines and the difficulty of coordinating the lender, surveyor, solicitor and loan administrator. We should not create another long-term loan that leaves people confused about what they owe and how they can pay it off, as has happened in the debate over student loans.
Your First Home needs clear terms from day one: when interest starts, how it changes, how the loan is valued and repaid, and what happens when an owner sells or remortgages.
ADVICE FOR BUYERS AND WHAT WE WANT
First-time buyers should explore Your First Home, but should not assume it is their only route into ownership – or that they cannot buy until it launches. There are more mortgage options than many people realise, including 100% mortgages for eligible renters and family-backed mortgages that allow parents to use their savings as security without giving the money away. Eligibility and costs vary, so speak to a mortgage adviser before ruling yourself out.
One strength of Help to Buy was its visibility: it encouraged people who thought homeownership was beyond them to find out what was possible.
Your First Home could do the same, provided buyers are encouraged to compare all their options. Ask an adviser to show the total cost of each route, including what you would pay after any interest-free period ends.
Budget for service charges, insurance, maintenance and moving costs.
Before buying a flat, ask your conveyancer to examine the lease, service charge accounts, planned major works and building safety information. A low deposit helps only if the home remains affordable and saleable.
We want government to set realistic local price and income caps; prevent scheme support being absorbed into new-build prices; publish fair, comprehensible equity-loan terms and an easy repayment process; accelerate leasehold reform; and measure the additional buyers and homes the policy delivers.
It should also look beyond one new-build scheme.
Scrapping stamp duty for people buying a home to live in would reduce the cost of moving across the market.
Helping existing owners move can free up homes for first-time buyers too.
At a minimum, the government should raise the stamp duty thresholds for first-time buyers so they do not have to pay tax on their first home, including in higher-priced areas such as London.
Any change should sit alongside measures to increase supply and keep prices affordable.
The goal is lasting homeownership and a housing market in which people can move as their lives change—not simply a faster route through the front door.
