Burnham unveils 'Your First Home' scheme for first-time buyers

Under "Your First Home", buyers of new-build properties would need a deposit of 2.5%. The government would lend them up to 20% of the home's value through an equity loan, and a conventional mortgage would cover the rest. The loan would be interest-free for an initial period, but the government hasn't yet said how long that period will last or what buyers will pay afterwards. More details are expected in next month's Budget.

Burnham said too many young people were struggling with housing costs and had given up on ever owning a home, and pledged that the government would "step in to help more first-time buyers on to the housing ladder". He said the scheme should also give housebuilders the confidence to build more homes.

How the numbers could work

Rightmove puts the national average first-time buyer property price at around £230,000. At that price, a buyer would need a deposit of about £5,750. The equity loan would cover up to £46,000, leaving a mortgage of roughly £178,250.

The equity loan is not a grant. Buyers would effectively owe the government a 20% share of their home's value, which they could repay early or settle when they sell. If the scheme follows the Help to Buy model, fees of 1.75% would start after the interest-free period and rise each year, and those payments would not reduce the amount owed.

The scheme is expected to be funded by reprioritising existing government budgets, with housebuilders contributing to its running costs. Ministers haven't confirmed whether there will be an age limit or a cap on the value of eligible properties.

Housing Secretary Angela Rayner said the scheme would focus help on the first-time buyers who need it most, particularly those without a large deposit from the "bank of mum and dad". She said it would learn from earlier schemes while keeping their benefits.

Lessons from Help to Buy

Your First Home is very similar to Help to Buy, which then-Chancellor George Osborne introduced in 2013. Originally, any buyer could use Help to Buy to purchase a new-build home worth up to £600,000 with a 5% deposit, backed by an equity loan of up to 20% that was interest-free for five years. The first phase ran until 2021. A second version, which closed in 2023, was limited to first-time buyers and had regional price caps.

An official evaluation found that more than 387,000 homes were bought through Help to Buy, around 328,000 of them by first-time buyers, and a separate review put its social value at £25bn over its lifetime. The evaluation also concluded that although the scheme helped people into home ownership in some areas, it didn't overcome affordability barriers in places that were already expensive. Critics have long argued that Help to Buy was poorly targeted and pushed up new-build prices.

Industry welcomes plans, Conservatives critical

The Home Builders Federation welcomed the proposals. It said it had long campaigned for better access to home ownership and that its analysis showed a well-designed scheme could make a real difference to households struggling to buy.

Shadow housing secretary Katie Lam said Labour wanted first-time buyers to take on more debt to afford the small number of homes being built, and warned that another levy on developers could push up new-build prices. She called the policy "a colossal admission of failure". The Conservatives have said they would scrap stamp duty and focus on building homes where people want to live.

Stronger council powers over empty homes

The government also announced plans to make it easier for councils to take over empty properties and use them to house people in need. Labour said the changes would help bring some of England's more than 300,000 empty dwellings back into use.

Rayner said the government would also consider further changes so that local authorities don't have to absorb the costs of taking over empty homes. Conservative shadow housing and planning minister Gareth Bacon accused her of reaching for any lever she could find to hit Labour's housebuilding target.

1.5 million homes target under pressure

The announcements come as the government faces growing questions over its pledge to build 1.5 million homes in England by the next election. Rayner recently admitted there was only a slim chance of meeting the target, though she said she wasn't abandoning it.

Data up to June suggested housebuilding was running behind the pace needed to meet the goal. BBC Verify analysis found that the number of new homes being built fell during Labour's first year in office, continuing a decline that began under the previous Conservative government.