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Burnham Unveils 'Your First Home' Scheme for First-Time Buyers
Confirmed
In Short: Prime Minister Andy Burnham announced a new scheme to help first-time buyers purchase homes with a deposit as low as 2.5% and a government-backed equity loan.
Prime Minister Andy Burnham announced a new scheme called 'Your First Home' aimed at helping first-time buyers enter the housing market. The scheme will allow buyers to purchase a home with a deposit of just 2.5% and access a government-backed equity loan covering up to 20% of the property’s value.
Burnham outlined the plan during his speech at the Labour Party Conference, emphasizing the need to address longstanding concerns from leaseholders and increase council home construction.
The scheme is designed to support first-time buyers who cannot rely on financial assistance from family members, often referred to as the 'Bank of Mum and Dad.' Burnham stated, 'So we will step in to help more first-time buyers on to the housing ladder, especially those who can’t call on the bank of mum and dad.
The full details of the scheme will be announced in the Budget on October 28. The interest-free nature of the loan is expected to be particularly valuable given current mortgage rates.
City and Country, a housing developer, welcomed the new scheme. The company is currently transforming the former M&S building in Colchester into the high-end multi-use Minerva House.
Jonathan Rolande, a property expert, noted that the scheme is unlikely to directly impact home values soon. He said, 'Although we haven’t heard the full details of the scheme yet, I’d say not directly, and not soon.
The scheme will include a household income cap and a local property price cap to ensure targeted support. However, it remains unclear whether buyers’ savings will be measured.
IFA Magazine noted that the previous Help to Buy scheme only increased house prices by around 2% over its course, although Land Registry data shows a 33% increase in the five years following its announcement.
The new scheme is expected to be open to first-time buyers in England with a deposit of 2.5%, providing them with a loan worth 20% of their new build property’s value to help pay for their new home.
Funding for the scheme will come from existing government budgets, with housing developers also contributing to running costs.
The scheme aims to help first-time buyers who would be unable to afford a first home otherwise, addressing the issue of housing as an essential need rather than a market of 'winners and losers.
What this adds
The scheme's details, including whether it will feature a higher weighting for higher property prices in London, will be revealed in the upcoming Budget.
The scheme's design will need to be carefully balanced to avoid claims of unfairness, particularly regarding first-time buyers who have saved through the Government’s LISA.
Background
Prime Minister Andy Burnham unveiled a new scheme called 'Your First Home' aimed at helping first-time buyers enter the housing market.
Prime Minister Andy Burnham unveiled a new scheme aimed at helping first-time buyers enter the housing market, including a deposit requirement of just 2.5% and a government-backed equity loan covering up to 20% of the property's value.
What's confirmed
- Your First Home is for first-time buyers of new-builds only.
- “We don’t let people who sell food damage health, so why do it with homes,” Burnham said during his speech.
- Burnham indicated a 10-year plan for housing would be published later this year.
- Prime Minister Andy Burnham has outlined a series of housing policy measures at the Labour Party Conference, including reforms to first-time buyer schemes, leasehold legislation, and new powers for local authorities to address empty and substandard properties.
- In his first conference speech as Prime Minister, Burnham criticised previous governments for treating housing as a market of “winners and losers” rather than an essential need.
- Burnham committed to introducing leasehold reform legislation before Christmas, addressing longstanding concerns from leaseholders.
- The government also plans to increase council home construction and reform the Right to Buy scheme, though specific details were not provided.
What's still developing
- The prime minister has indicated that this scheme is not intended for buyers from wealthy families – those who can rely on the so-called “Bank of Mum and Dad” – but the exact design of the scheme will need to be carefully balanced to avoid claims of unfairness, with some first-time buyers having put aside savings into the Government’s LISA to put towards their first purchase.
- We eagerly await the full details at the upcoming Budget, in particular whether the new scheme will feature a higher weighting to account for higher property prices found in London – a critical component of the original Help to Buy.
- What has been confirmed is that the Government will extend a loan to would-be first time buyers that will initially be interest-free and allow purchases with deposits from as little as 2.5% of the purchase price.
- Any scheme that penalises those savers would risk widespread criticism.
- Yet, ironically, proactively cultivating gratitude is one of the things that can actually help us feel less stressed.