On 26th September, Prime Minister Andy Burnham announced the Your First Home scheme, a new scheme designed to help first-time buyers get on the property ladder.

What is the Your First Home scheme?

One of the main barriers facing prospective first-time buyers is saving enough money for a deposit. While a buyer may be able to afford their mortgage repayments, building up a substantial deposit can take many years, particularly where property prices are high.

Under the proposed scheme, eligible buyers will be able to purchase a new-build home with a minimum deposit of 2.5%, with a 20% equity loan helping to reduce the amount that needs to be borrowed through a mortgage.

The scheme follows the previous Help to Buy programme, which supported first-time buyers purchasing new-build properties between 2013 and 2023.

How will the Your First Home scheme work?

The government has announced that eligible first-time buyers will be able to use an equity loan of 20% of the property’s value.

The exact operation of the scheme, including the terms of the equity loan and the circumstances in which it can be used, will depend on the final rules.

The government has also indicated that the equity loan will have an initial interest-free period. Further information about how the loan will work after this period is expected to be confirmed when more details of the scheme are released at the upcoming Budget on 28th October.

Who is the Your First Home scheme for?

The scheme is aimed at first-time buyers who have a regular income but may struggle to save a large deposit.

It is particularly intended to help people who do not have access to financial support from family members when purchasing their first home.

However, the scheme will not be available to everyone. The government has indicated that eligibility will be subject to a number of limits.

These are expected to include:

• Household income caps, meaning those with higher household incomes may not qualify.
• Deposit or savings limits, which are intended to focus support on buyers who genuinely need help with their deposit.
• Property price caps, with different limits expected to apply in areas where property prices are higher, such as London.
• First-time buyer eligibility, meaning the scheme is intended for people purchasing their first home.

The exact thresholds for these criteria have not yet been confirmed.

Can the scheme be used to buy any property?

The Your First Home scheme is intended to support the purchase of new-build homes, rather than existing properties.

This means that if you are considering using the scheme, it will be important to check whether the property you are interested in is eligible and whether the developer is participating in the scheme.

Further details are expected to clarify which properties and developers will be able to take part.

When will the Your First Home scheme launch?

Although the scheme has now been announced, the full details are not yet available.

Further information is expected to be provided as part of the Autumn Budget, including details about eligibility, property price limits and how the scheme will be implemented.

For first-time buyers who are currently saving for a deposit, it may therefore be worth keeping up to date with the latest announcements before making decisions based on the proposed scheme.

What does the scheme mean for first-time buyers?

For those who meet the eligibility requirements, the Your First Home scheme could make buying a new-build property more accessible by reducing the size of the deposit needed.

However, a smaller deposit does not remove the other costs and considerations involved in buying a property.

First-time buyers should consider costs such as mortgage fees, legal fees, searches, surveys and other expenses associated with purchasing a home. It is also important to understand the terms attached to any equity loan before committing to a purchase.

The legal process of buying a property can also be complex, particularly when purchasing a new-build home. Issues such as the property’s title, searches, planning permissions, guarantees and the terms of the purchase contract will need to be considered.

How can we help?

Whether you are buying your first home with the help of a government scheme or through traditional mortgage finance, having the right legal support can help you understand the purchase and identify potential issues before you commit.

Our residential property team can carry out the necessary legal checks and searches, review the contract and other documentation, and guide you through the legal process from exchange of contracts through to completion. Speak to our team on 0161 928 3848 or email mch@mchaleandco.co.uk