The key facts
- Income limits: £110,000 outside London and £140,000 in London, confirmation expected at next week's budget
- Loans will cover 20% of the value of new-build homes in England, allowing a deposit from 2.5%
- Conservatives criticise the scheme as a 'colossal admission of failure' of Labour's housing policy
Income limits for the new scheme
According to the BBC, citing an initial report by The Times, to take part in the government-backed Your First Home loan scheme for first-time buyers, households will need to earn less than £110,000, or less than £140,000 when buying a home in London. These limits are expected to be officially confirmed at next week's budget. The Times reported that ministers had initially planned to set the thresholds at £90,000 outside London and £110,000 in the capital, but then decided that such restrictions would exclude too many middle-income couples, such as teachers and nurses.
Scheme terms
The Your First Home scheme provides for government equity loans of 20% of the value of new-build homes in England purchased from participating developers. The loans will include an initial interest-free period and are intended to help buyers purchase a home with a deposit from 2.5%. Prime Minister Andy Burnham, who presented the scheme at the Labour Party conference last month, said it would be aimed at those who 'genuinely need support'. Previous first-time buyer support schemes did not restrict access by income, but were criticised for driving up house prices, as they allowed relatively well-off households to borrow more.
Funding and reaction
Labour said the scheme would be funded within existing budgets, but has not yet disclosed which areas of spending will be cut. Participating developers will also be asked to contribute towards covering the costs of running the scheme. The Home Builders Federation, which represents developers, welcomed the plans and urged the government to launch the scheme quickly. The Conservatives, however, called the proposals a 'colossal admission of failure' of Labour's housing policy and expressed concerns that a new levy on developers could push up the prices of new-build homes. The government also argues that the scheme will help accelerate housebuilding, after ministers admitted that the target of building 1.5 million homes in England by the next election is unlikely to be met.
Link to Help to Buy
Like the Help to Buy scheme, launched under the Conservative–Liberal Democrat coalition government, the new scheme uses equity loans, the repayment amount of which is tied to changes in the value of the purchased home. Help to Buy, which operated in its original form from 2013 to 2021, allowed all buyers to put down a 5% deposit on a new-build home worth up to £600,000, with up to 20% of the value covered by an equity loan, interest-free for the first five years. The second version of the scheme, which ran from 2021 to 2023, restricted participation to first-time buyers and introduced regional price caps on the properties purchased.
Image source, Getty Images 
