The UK government is preparing a new equity loan program for first-time buyers purchasing newly built homes, offering support to households able to provide a deposit of 2.5%. The measure comes as the government faces pressure to stimulate homebuilding while pursuing its target of adding 1.5 million homes by 2029.
Under the plan, buyers will be offered a 20% equity loan, with an initial interest-free period. According to Bloomberg, Chancellor of the Exchequer John Healey is expected to provide further details in next month’s budget, while pre-registration is due to open by the end of 2026.
A New Version of Help to Buy
The program, called “Your First Home,” revives elements of the Help to Buy scheme introduced by former Conservative chancellor George Osborne. That initiative operated for a decade from 2013 and provided government-backed equity loans intended to help buyers purchase newly built properties.
Prime Minister Andy Burnham said the policy was aimed particularly at prospective homeowners unable to rely on financial assistance from their families. “Too many young people are struggling with the cost of housing, with many giving up hope of ever having a home to call their own,” Burnham said in the government statement cited by Bloomberg.
Funding for the new program will come from reductions to government budgets elsewhere, while property developers will contribute toward its running costs. The government has not yet provided all of the program’s financial details.
The previous Help to Buy scheme cost about £30 billion during its decade of operation and generated roughly £27 billion in loan repayments and income. According to the government-commissioned audit reported by Bloomberg, it was also estimated to have produced a net present social value of £25 billion through welfare gains associated with increased supplies of quality housing.
The same audit found that Help to Buy increased both housing affordability and housing supply. Housing Secretary Angela Rayner said the new version would draw on lessons from earlier schemes while retaining their benefits.
Lucian Cook, head of residential research at Savills, said intervention could prevent the housebuilding industry from permanently losing capacity. He also noted that house prices are relatively depressed and said the government could obtain a financial return on its investment if interest rates decline over the medium term.
Housing Construction Remains Well Below the Government’s Target
The announcement arrives while Labour is struggling to meet its commitment to build 1.5 million homes by 2029. Research from Bloomberg Intelligence indicated that the UK could miss that target by at least 40%.
According to Bloomberg Intelligence analyst Iwona Hovenko, little more than 200,000 homes are expected to be created annually between 2026 and 2029. Delivering the government’s pledge would require 324,000 homes per year.
Large developers have already taken steps that could weigh on future construction. Barratt Redrow, Berkeley Group Holdings and Taylor Wimpey have reduced their land purchases, Bloomberg Intelligence reported, creating concerns about medium-term housing completions.
Economic conditions have also placed pressure on the sector. Higher energy prices linked to the war in Iran have weakened demand and increased difficulties for developers, while elevated mortgage rates have constrained potential buyers. An S&P Global measure of construction activity showed the industry contracting at its fastest rate in five months.
Hovenko’s report called for stronger incentives to attract buyers, including measures resembling Help to Buy and changes to stamp duty. It also identified public housing programs, regulatory changes and assistance for smaller developers as potential ways of increasing and diversifying housing supply.
The new equity loan program therefore arrives as the government attempts to address both sides of the housing market: helping first-time buyers access new homes while supporting demand for a construction sector facing weaker activity.
