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.<\/p>\n\n\n\n
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\u2019s budget, while pre-registration is due to open by the end of 2026.<\/p>\n\n\n\n
The program, called \u201cYour First Home,\u201d revives elements of the Help to Buy<\/strong> 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.<\/p>\n\n\n\n Prime Minister Andy Burnham said the policy was aimed particularly at prospective homeowners unable to rely on financial assistance from their families. \u201cToo many young people are struggling with the cost of housing, with many giving up hope of ever having a home to call their own<\/em>,\u201d Burnham said in the government statement cited by Bloomberg.<\/p>\n\n\n\n Funding for the new program will come from reductions to government budgets elsewhere, while property developers <\/strong>will contribute toward its running costs. The government has not yet provided all of the program\u2019s financial details.<\/p>\n\n\n\n The previous Help to Buy scheme cost about \u00a330 billion during its decade of operation and generated roughly \u00a327 billion in loan repayments and income. According to the government-commissioned audit reported by Bloomberg<\/a>, it was also estimated to have produced a net present social value of \u00a325 billion through welfare gains associated with increased supplies of quality housing.<\/p>\n\n\n\n The same audit found that Help to Buy increased both housing affordability and housing supply. Housing Secretary Angela Rayner <\/strong>said the new version would draw on lessons from earlier schemes while retaining their benefits.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n