UK announces first-time buyer equity loan plan ahead of October Budget
The proposed Your First Home scheme would help eligible buyers in England purchase new-build homes with a 2.5% deposit, but its caps, costs and start date remain undecided.
The UK government announced on 26 September that it plans an equity loan scheme to help first-time buyers in England purchase new-build homes with a 2.5% deposit. The proposal could lower the amount buyers need upfront, but ministers say the full terms will be confirmed at the October Budget.
Under the proposed Your First Home scheme, eligible buyers would receive a government-backed equity loan worth 20% of a qualifying property's price. They would have to buy from a developer participating in the scheme, according to the Ministry of Housing, Communities and Local Government's announcement.
What remains to be decided
The government says the loan would have an initial interest-free period. It has yet to specify how long that period would last, who would qualify under a planned household income cap, or the local property price caps. Scheme costs and the date buyers could apply are also due to be set out at the Budget. Developers joining the programme are expected to contribute towards its costs.
Ministers say the plan would help buyers who otherwise could not afford a first home and support the new-build market. Those are expected benefits, rather than results of a scheme already in operation. The announcement also suggests buyers could save hundreds of pounds a month compared with a 95% mortgage, but the final terms needed to assess that comparison have not been published.
The wider Budget picture
BBC economics editor Faisal Islam described the housing announcement as one attempt to bolster confidence before Chancellor John Healey's 28 October Budget. His analysis framed the chancellor's broader choices around the duration of economic pressure linked to the Iran war and whether an improvement in economic sentiment can be sustained.
The confidence picture is mixed. Reuters reported that GfK's September consumer confidence measure rose one point to minus 13, its highest since August 2024, while other surveys showed declines. A negative GfK reading and divergent surveys leave open whether the recent improvement will last.
Sources and context
- New first-time buyer scheme to be confirmed at BudgetMinistry of Housing, Communities and Local Government
- Budget 2026: The two big decisions Chancellor John Healey has to makeBBC News
- UK consumer confidence hits more than two-year high in September, GfK saysReuters (republished by MarketScreener)
AI-assisted article checked against the listed sources. NewsJaws did not conduct interviews or attend the reported events.
About NewsJaws Desk
AI-assisted reporting and explainers reviewed against the linked source documents. No claim of on-scene reporting or original interviews.