Earnings limit of up to £140K for first-time buyers loan scheme
The Your First Home scheme will offer government-backed loans for those buying new-builds in England.
Earnings limit of up to £140K for first-time buyers loan scheme
The government is expected to let households earning up to £110,000 apply for its new loan scheme aimed at helping first-time buyers in England. A higher earnings cap of £140,000 is expected to apply to buyers of properties in London.
The Your First Home scheme will provide government-backed equity loans worth 20% of new-build homes bought from participating developers.
The loans, which will also come with an initial interest-free period, are intended to help people purchase a home with deposits as low as 2.5%.
Earlier schemes to support first-time buyers did not impose income limits, but they were criticised for pushing up house prices by enabling relatively wealthy households to borrow more.
When he unveiled the Your First Home scheme at last month’s Labour conference, Prime Minister Andy Burnham said it would concentrate on those who "really need support".
Full details of the changes, including the salary caps, are due to be announced at next week’s Budget.
The Times reported that ministers had first settled on earnings limits of £90,000 for homes outside outside London and £110,000 in the capital, before deciding that would exclude too many middle-income couples, including teachers and nurses.
The government has also said the scheme will help increase housebuilding, after ministers admitted they are on course to miss a target of building 1.5 million homes in England by the next election.
Labour has said the scheme will be financed from within existing government budgets, but it has not yet explained which other areas will face spending cuts.
Developers participating in the scheme will also be asked to help cover running costs.
As with the Help to Buy scheme introduced under the Conservative-Liberal Democrat coalition government, the new programme will use equity loans tied to changes in the value of the properties they help finance.
That scheme, which originally ran from 2013 to 2021, allowed all homebuyers to put down a 5% deposit on a newly built home worth up to £600,000.
Up to 20% of the home’s cost was covered by a shared equity loan, which was interest-free for the first five years.
A second version of the scheme, which ran from 2021 to 2023, limited access to first-time buyers and introduced regional price caps on the properties that could be purchased under the programme.