Prime Minister Andy Burnham announced on 26 September that the government is bringing back an equity loan scheme for people buying their first home, before publishing the income limits and local property price caps intended to make sure the support reaches people who could not otherwise afford a home.
Under Your First Home, buyers in England are expected to need a deposit of 2.5 per cent, with government providing an equity loan worth up to 20 per cent of the price of a qualifying newly built property. The loan will have an initial period free of interest. Developers taking part will also be required to contribute towards the scheme, although the size of that contribution has not yet been announced.
The final cost, implementation timetable, household income cap and local property price limits are due to be set out at the Budget. Ministers say those restrictions will ensure the scheme is targeted at people buying their first home who would otherwise struggle to purchase.
The previous Help to Buy equity loan scheme ran from 2013 to 2023 and had the same basic structure: public money reduced the deposit and mortgage required to buy a newly built home. Evidence published since then shows that it helped many people into home ownership, but that a substantial proportion of recipients could have bought without it.
The latest evaluation commissioned by the government, published on 15 September, found that 46 per cent of Help to Buy customers said they could not have bought a home without the scheme. The remaining 54 per cent said they could have bought a home without Help to Buy, although they used the scheme to buy the property they wanted.
Earlier research examined by the National Audit Office had put the proportion unable to buy any property without support even lower, at 37 per cent. It found that around three in five participants could have bought some property without Help to Buy and that 31 per cent, around 65,000 households at that stage of the scheme, could have bought the property they wanted without it.
Those figures come from different studies and periods and should not be treated as directly interchangeable. Both, however, found significant numbers of recipients who were not wholly dependent on the scheme to become homeowners.
The government says Your First Home will address that through household income limits and local price caps. Those thresholds are not yet public.
Its econometric analysis estimates that around 15 per cent of new homes built in England during Help to Buy 1 and Help to Buy 2 between 2013 and 2023 were attributable to the scheme. The evaluation also calculates a net present social value of £25.1 billion in 2024/25 prices and classifies Help to Buy as delivering "very high" value for money. That assessment includes the value created by additional housing supply and the fact that government recovers money as equity loans are repaid. The evaluation puts the scheme's net cost to the public sector at about £3.6 billion after loan redemptions, interest and fees are taken into account.
The evaluation found evidence of increased housing supply from the early years of Help to Buy, but no further increase when the maximum equity loan available in London was raised in 2016. It also found little evidence of a large change in supply when the scheme ended in 2023. Mortgages with a high loan to value ratio had become more widely available by the later phase of Help to Buy, reducing the extent to which some buyers needed government support.
For small and medium sized developers, the evaluation found statistically significant positive effects on profit margins from 2016 onwards compared with matched firms that did not participate. It found similar patterns among larger developers, although the lack of a meaningful comparison group of firms that did not take part made the effect harder to isolate. The National Audit Office had already found that five large developers accounted for just over half of Help to Buy sales in the period it examined, and that the scheme contributed to increases in housebuilders' sales and profits.
Investors expect Your First Home to benefit the sector again. The FTSE index of British housebuilders rose 16 per cent after the government confirmed the new scheme, with Reuters reporting that builders including Persimmon, Barratt Redrow, Bellway and Taylor Wimpey were expected to be among the main beneficiaries because of their exposure to newly built homes at lower prices. Reuters also noted that part of the rally may have reflected investors closing short positions.
The latest evaluation also found some effect on house prices, although the scale was uneven and should not be reduced to one national figure. Around the border between England and Wales, the estimated price effect was small, up to about 2 per cent. The report found stronger evidence that Help to Buy contributed to price growth in some areas that were already relatively expensive, while its analysis of London produced mixed results. Help to Buy properties themselves were estimated to carry a premium of around 1 per cent compared with similar newly built homes outside the scheme.
Government also shares the risk from the property market created by equity loans. When the property is sold, the state receives the same percentage of its market value as the original equity stake. Rising prices increase the value of that stake; falling prices reduce it. The NAO previously warned that Help to Buy therefore exposed government to significant risk from the housing market while tying up substantial public financial capacity.
That risk looks different depending on who receives the loan. Public exposure may be easier to justify where the buyer genuinely could not purchase without assistance. The previous scheme also provided support to many households who said they could have bought a home anyway.
Your First Home is intended to narrow that group through income and local price limits. The government has announced the equity loan structure before publishing those limits, the developer contribution, the final cost or the implementation timetable. Those details are due at the Budget.