Your First Home: 2.5% deposits in new-build sales push

First-time buyers in England could be offered a Government equity loan worth 20% of a new-build home’s value and need a deposit of just 2.5% under the Government’s Your First Home announcement ahead of Labour conference.

The proposed Your First Home scheme is intended to help buyers who can support a mortgage but struggle with the deposit and monthly cost of buying. It also lands at a difficult moment for housebuilders, when ministers are trying to increase the supply of planning permissions while developers continue to warn that homes still need purchasers before sites can be built out at scale.

But the headline numbers are ahead of the rulebook. The Government has confirmed there will be a household income cap, local property price caps and a developer contribution, with the detail to be set out at the Budget on 28th October. Questions remain over any savings test, repayment rules, the length of the interest-free period, lender requirements and the interaction with existing affordable housing policy.

A buyer scheme with a housebuilding purpose

Your First Home is being presented as help for aspiring homeowners, but its restriction to new-build homes gives it a second purpose. It directs purchasing power towards the product ministers also want developers to build more quickly.

That matters because the housing delivery argument is no longer only about getting schemes through planning. The latest MHCLG planning statistics, published on Thursday, show that a provisional 212,000 homes secured detailed permission in England in the year to June 2026, down 12% from 242,000 a year earlier. Planning Geek examined that weakening pipeline in our report on housing permissions falling to a 13-year low.

More permissions are clearly needed if output is to rise. But a permission is not a completion, and developers decide when to open outlets and release homes partly by reference to expected sales.

Tim Foreman, managing director of Land and New Homes at LRG, made that point unusually directly before Labour conference:

“Planning reform is necessary, but planning permissions are not purchasers.”

Foreman argued for a tightly targeted successor to Help to Buy, restricted to first-time buyers and new homes, with regional price caps, income limits, developer contributions and clearer redemption rules. Those recommendations overlap strikingly with parts of Your First Home now being reported, although there is no evidence that the Government has adopted LRG’s proposal as its blueprint.

The commercial backdrop supports at least part of his diagnosis. Barratt Redrow’s full-year results published on 16th September recorded 17,667 completions. Its underlying private reservation rate was 0.56 homes per outlet per week, only slightly above 0.55 a year earlier, while recent guidance was reduced because planning delays were expected to restrict outlet openings. The company has also pointed to continuing affordability pressures on buyers.

So the two constraints can exist together. A site can be difficult to permit and difficult to sell. The Government’s latest move suggests it now wants policy working on both ends of that chain.

Why first-time buyers are back at the centre

Mortgage conditions explain the immediate appeal of a smaller deposit. Bank of England figures show 56,100 net mortgage approvals for house purchase in July, below the previous six-month average of about 60,800. The effective rate on newly drawn mortgages rose to 4.45% from 4.35% in June.

The latest UK House Price Index puts the average first-time buyer price in England at £245,515 in July. A 2.5% deposit on that figure would be about £6,140, compared with roughly £12,276 at 5%. That is only an illustration, not a forecast of what a Your First Home buyer would need, because the scheme’s property price caps and lender rules have not yet been published.

A lower deposit also does not solve every affordability problem. Buyers still need a lender willing to advance the first mortgage and must be able to service it. Government has not yet said what minimum mortgage share, loan-to-income tests or lender participation rules will apply.

Nor is Your First Home the same as the permanent mortgage guarantee scheme. That scheme supports participating lenders offering 91% to 95% loan-to-value mortgages across the UK. It guarantees part of the lender’s potential loss; it does not give the buyer an equity loan.

Help to Buy returns to the argument

The resemblance to Help to Buy is obvious, but calling the new policy simply Help to Buy would get ahead of the facts.

Under the former English Help to Buy equity loan, buyers generally provided at least a 5% deposit and Government provided an equity loan of up to 20% outside London, rising to 40% in London. The loan was interest-free for five years and repayment moved with the property’s market value. Later versions were restricted to first-time buyers and introduced regional property price caps.

We do not yet know whether Your First Home will copy those redemption mechanics, whether 20% will be a fixed loan or a maximum, how long the new interest-free period will last, or what interest or fees will apply afterwards.

What ministers do now have is much stronger evidence about the old scheme. The Government’s new independent Help to Buy evaluation, published this month, covers more than 387,000 purchases, including 328,000 by first-time buyers.

Its central estimate is that around 15% of new-build homes in England constructed during the scheme’s 2013 to 2023 life were attributable to Help to Buy. Researchers also found that the scheme increased developer confidence and produced spillover supply beyond homes bought directly through it.

But the same evaluation provides ammunition for critics of demand subsidy. Its customer survey found 54% said they could have bought a home without Help to Buy, although often a smaller, cheaper or less preferred property. It estimated a normal new-build premium of around 5%, with Help to Buy homes carrying roughly one additional percentage point, and found evidence of a modest local house-price effect in some areas.

The public finance result is equally important. MHCLG assessed Help to Buy as delivering “very high” value for money, with an estimated £25.1 billion net present social value against a £3.6 billion net public-sector cost after expected loan redemptions and income. That calculation is driven heavily by the value attributed to additional housing supply, not a £25.1 billion cash profit for the Treasury.

In other words, the new evaluation does not make the policy argument disappear. It gives both sides better evidence. Help to Buy appears to have supported supply and enabled some purchases that would not otherwise have happened, while also assisting many households who could have bought something without it and creating some price effects.

A familiar blueprint was already circulating

The Government’s announcement also follows a burst of industry lobbying for a new equity-loan product.

On 22nd September, Labour MP Mike Reader wrote in LabourList about My Loan to Own, a proposal developed by Weston Homes and TYI Strategy and launched in Parliament earlier this year. It would give eligible first-time buyers an equity loan of up to 20% on a new home, interest-free for five years, with developers intended to cover Government financing costs.

The Home Builders Federation has made a similar case. Its Autumn Budget submission, updated on 23rd September, calls for a new 20% first-time buyer equity loan supported by a developer contribution, arguing that the market needs stronger “effective demand” as well as more planning permissions.

The similarities with the outline of Your First Home are substantial. They do not establish that ministers copied either proposal or that the final Government product will use the same funding structure. The Budget still needs to answer how much developers will contribute, how that contribution will be collected and how much capital Government itself will put at risk.

What Your First Home means for First Homes and section 106

For planning practitioners, one of the easiest mistakes would be to confuse Your First Home with the existing First Homes policy.

First Homes are discounted market homes secured through the planning system. Eligible buyers purchase at a discount of at least 30% to market value and, crucially, that percentage discount is normally retained when the home is resold. Your First Home, by contrast, is being described as an equity loan to the buyer.

Government has not yet said whether the equity loan could be used to buy a First Home, whether the policies will operate entirely separately, or whether First Homes planning policy will be changed. Existing Government guidance for First Homes says the old Help to Buy equity loan could not be combined with a First Home, but that does not answer the position for a new scheme that has not yet been designed in public.

The same caution applies to section 106 and CIL. Nothing announced today establishes an exemption for participating market homes from ordinary affordable housing obligations, local policy or the Community Infrastructure Levy. If Government intends any change to those planning liabilities, it will need to say so.

That is potentially more important to land value and scheme viability than the consumer-facing headline. A buyer subsidy that sits on top of the existing planning system is a very different intervention from one that also alters affordable housing or infrastructure obligations.

Budget will decide what buyers and builders actually get

Labour conference begins in Liverpool on Sunday, with Burnham due to make his leader’s speech on Tuesday. There are therefore no conference-stage comments to attribute to this announcement yet.

Burnham has, however, made housing central to his Government’s wider programme. In June, before becoming Prime Minister, he said:

“Everything starts with a good home.”

His Government has since promised a major expansion of council and social housebuilding. Your First Home is a different intervention, aimed at private ownership and the new-build sales market. Taken together, they show a housing strategy that is trying to work through several tenures rather than relying on planning reform alone.

The timing also marks a change in emphasis from the debate only 11 days ago. Reporting around the Help to Buy evaluation said housing ministers and officials had pressed for a successor under the previous administration, while then Chancellor Rachel Reeves preferred to concentrate intervention on supply, planning reform and the £39 billion affordable housing programme. It would be too strong to say Burnham’s arrival alone caused today’s decision, but demand-side support has plainly moved from an internal argument to announced Government policy.

The biggest details remain for Chancellor John Healey’s Budget on 28th October. Government still needs to confirm the household income ceiling, whether any savings or deposit cap applies, the local property price cap levels, the length of the interest-free period and what follows it, redemption rules, treatment of gains and losses in property value, participating lender requirements, the size and mechanism of the developer contribution, the total public funding envelope, Homes England’s role and the date purchases can actually begin.

The announcement says further details, including costs and implementation timings, will be confirmed at the Budget. At the time of publication, no administrative role for councils has been set out.

Until those decisions are made, 2.5% deposits and a 20% equity loan are the attention-grabbing part of Your First Home. The more consequential housing-market test will be whether a tightly targeted scheme can turn extra purchasing power into genuinely additional homes, rather than simply changing who buys them or what they pay.