First-time buyers could put down just 2.5 per cent

First-time buyers in England could buy a new-build home with a deposit of just 2.5 per cent under a new Government scheme, which will be confirmed in next month's Budget.

The Your First Home scheme, announced on Saturday, is expected to support deposits of 2.5 per cent backed by Government equity loans worth 20 per cent of the property's value.

How it would work

The scheme will be available to first-time buyers in England purchasing a new-build home from a developer that has signed up to it. Buyers would be able to take out the equity loan with an initial interest-free period, meaning those using the scheme "could save hundreds of pounds per month compared with a 95% mortgage," according to the Government.

It is expected to include safeguards, such as caps on income and on local property prices, to make sure help goes to those who need it most.

Not open yet

The scheme is not yet open for applications. Full details, including the income and property-price caps, costs and when it will start, are due to be set out in the Budget next month. Pre-registration is expected to open by the end of 2026.

Echoes of Help to Buy

The idea is similar to the former Help to Buy equity loan scheme, which ran in England from 2013 to 2023 and helped hundreds of thousands of people buy new homes. Supporters say equity loans help people who can afford mortgage repayments but struggle to save a large deposit. Critics of Help to Buy argued it pushed up new-build prices and benefited housebuilders.

Industry groups have generally welcomed the new scheme, while some have warned about the risks for buyers who put down very small deposits if house prices fall.

What it means for Birmingham

Birmingham has a large pipeline of new homes planned, from city centre apartment blocks to large regeneration schemes such as Druids Heath. First-time buyers in the city will be watching for the details in the Budget, especially the property-price cap that will apply in each area.