Prime Minister Andy Burnham's government has announced plans for a new Your First Home equity loan scheme that could allow first-time buyers in England to purchase qualifying new-build homes with deposits of just 2.5%. The Ministry of Housing, Communities and Local Government announcement says buyers are expected to receive a government-backed equity loan worth 20% of the property value when purchasing from a developer signed up to the scheme. The full rules, including income limits, local property-price caps, costs and implementation dates, will be confirmed at the Budget.
M0121 residential development under construction at Greenwich Peninsula, photographed on September 2026. The Lower Riverside scheme is planned to deliver 300 new homes across two buildings. Photo: London Construction Magazine.
Burnham Puts the Deposit Barrier at the Centre
Prime Minister Andy Burnham has presented the policy as a way to help younger households who can manage monthly housing costs but struggle to accumulate a large deposit while also paying rent. In a post on X announcing the scheme, Burnham said high rents and house prices had left many young people doubting whether they would ever own a home. He added that "the dream of owning your own home shouldn't belong only to those with help from the bank of Mum and Dad."
That is the central financial change in the proposal. Instead of having to assemble a 5% or 10% deposit before considering affordability and mortgage requirements, an eligible buyer could enter the purchase with 2.5% of the property price, subject to the final rules and lender approval.
What a 2.5% Deposit Could Mean in London
London's higher property values make the deposit percentage particularly relevant. The examples below show the arithmetic if a buyer receives the full 20% equity loan and contributes the minimum 2.5% deposit. They are illustrative only: the Government has not yet announced London's property-price cap, household-income ceiling or mortgage eligibility requirements.
| New-build price | 2.5% deposit | 20% equity loan | Remaining purchase finance |
|---|---|---|---|
| £300,000 | £7,500 | £60,000 | £232,500 |
| £400,000 | £10,000 | £80,000 | £310,000 |
| £500,000 | £12,500 | £100,000 | £387,500 |
| £600,000 | £15,000 | £120,000 | £465,000 |
The remaining 77.5% in those examples would still need to be financed through the buyer's own resources and an eligible mortgage. The Government has not yet published lender criteria, so the lower deposit does not by itself establish that a purchaser will pass mortgage affordability checks.
New-Build Restriction Creates a Construction Link
Your First Home is not currently proposed as a subsidy for purchases across the entire housing market. The Government announcement specifically ties the equity loan to new-build homes from participating developers. MHCLG says the new-build market is facing pressure from construction costs and wider economic conditions and expects the scheme to support demand as well as home ownership. Developers will be required to make a contribution when joining the programme, although the size and structure of that contribution have not yet been published.
That supply-side connection matters in London. LCM's earlier analysis of 281,000 unbuilt London homes and the capital's residential delivery gap found that demand for housing does not automatically convert consented schemes into active construction. Sales rates, finance, construction costs and project viability all affect whether a development progresses to site. The policy therefore gives housebuilders a commercial reason to watch the Budget details closely. A larger pool of buyers able to purchase new-build stock could support sales absorption, but developers will also need to understand the participation cost, qualifying property limits and administrative requirements before assessing the effect on individual schemes.
How It Differs From Help to Buy in London
The concept has similarities with the former Help to Buy: Equity Loan programme, but the numbers announced so far are not identical. Under the final Help to Buy scheme operating from 2021 to 2023, buyers needed a minimum 5% deposit. London purchasers could receive an equity loan of up to 40%, compared with 20% elsewhere in England, and the London property-price ceiling was £600,000.
Your First Home halves the announced minimum deposit to 2.5%, but the Government has so far confirmed only a 20% equity loan. No separate 40% London allowance has been announced. Whether London receives different treatment through the final price caps or other eligibility rules is one of the main questions still awaiting the Budget.
The Government has also confirmed an initial interest-free period but has not yet specified its duration or what fees or interest will apply afterwards. Repayment mechanics and whether the Government's share will track changes in the property's future value have likewise not been set out in the 26 September announcement.
Developers Will Need the Budget Detail
For London's residential sector, the scheme arrives alongside other changes affecting new development economics. From 1 October, qualifying residential schemes also enter the new Building Safety Levy regime, adding another project cost that varies by borough and chargeable floorspace.
The next meaningful step for Your First Home is therefore the Budget. The Government is expected to publish the income cap, local property-price limits, developer contribution arrangements, scheme costs and implementation timetable. Until those details are confirmed, buyers and housebuilders can assess the 2.5% deposit and 20% equity-loan principle, but not final eligibility or the commercial impact on individual London developments.
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Expert Verification & Authorship: Mihai Chelmus Founder & Editor, London Construction Magazine | Construction Testing & Investigation Specialist |