Could a 2.5% deposit finally put homeownership within reach? The new Your First Home scheme could change how first time buyers enter England’s property market.

For many first-time buyers in England, saving enough for a deposit has become one of the biggest barriers to homeownership. UK Prime Minister Andy Burnham has announced the Your First Home scheme to help first-time buyers in England who are struggling to save for a large deposit. Under the plan, eligible buyers could purchase a new-build home with a deposit of just 2.5% and get a 20% equity loan toward the property.

A smaller deposit could make homeownership possible

The scheme is designed for people with a regular income who may struggle to build a large deposit or do not have financial support from family. Buyers will need to meet household income and property price limits, while limits on savings are also expected to ensure the support reaches people with fewer financial resources.

The 20% equity loan will have an initial interest-free period. The government says this could reduce monthly costs compared with a standard mortgage requiring a 5% deposit. Developers joining the scheme will also contribute towards its running costs.

The proposal comes as affordability remains a major issue for people trying to enter the property market. Prime Minister Andy Burnham said the policy is aimed at people who have struggled to see a realistic path to owning a home.

“Too many young people are struggling with the cost of housing,” Burnham said, adding that the government wants to help more first-time buyers onto the housing ladder.

When will buyers be able to register?

The scheme is expected to be confirmed by Chancellor John Healey in the October Budget, with registration planned to open by the end of 2026. More details, including income and property price caps, are expected at the Budget.

The government is also changing how councils can deal with long-term empty homes. Under the proposed reforms, councils could seek empty dwelling management orders after a property has been vacant for six months instead of two years. Ministers say the changes could help bring some of more than 300,000 empty homes in England back into use.

Could the scheme reshape the new-build market?

The government says the scheme could support demand for new-build homes while helping developers gain confidence to build. However, critics have raised concerns that buyers taking on additional debt could face greater financial pressure and that developer contributions could affect new-home prices.

The new plan also follows the earlier Help to Buy scheme. A recent government evaluation found that Help to Buy supported hundreds of thousands of purchases, but affordability barriers remained in some expensive areas.

As Business Fortune observes, Your First Home could become an important part of England’s first-time buyer market. Its longer-term impact will depend on the final eligibility rules, property prices, mortgage costs and whether developers respond by increasing new-build supply.

Sources: The Sunday Guardian, https://www.lancashiretelegraph.co.uk/news/26585130.new-scheme-help-first-time-buyers-housing-ladder/ https://www.bbc.com/news/articles/cv8e33gdw17no