The Government is considering launching a new version of the Help to Buy equity loan scheme in a bid to get Britain’s housing market moving, The i Paper can reveal.
Labour is currently at risk of falling short of its target to build 1.5 million new homes by 2029, and housebuilders have been calling for measures to help increase demand from buyers.
It is understood that No 10 is keen on the idea, believing it could help more first-time buyers buy homes. However, officials in Rachel Reeves’s Treasury are said to be less convinced about committing public money to a new scheme.
Ministers are still assessing how new homebuyer loans would work. The details are unclear at this stage and are still being thrashed out by officials.
In an interview with The i Paper last December, Reeves did not rule out a new version of Help to Buy, but argued the previous iteration under the Conservatives did not successfully “increase homeownership”.
Help to Buy was first launched in April 2013 by then-Chancellor George Osborne to boost the property market in the wake of the 2008 financial crisis.
The scheme offered first-time buyers the chance to buy a home with a 5 per cent deposit and a 20 per cent government-backed equity loan, with the remaining 75 per cent coming from a regular mortgage.
Before being wound down in 2023, the scheme provided almost £25bn in equity loans, which helped fund the purchase of around 390,000 properties.
However, critics of the scheme argued it artificially inflated house prices and boosted major housebuilders’ profits.
Developers have stepped up calls in recent months for the Government to reintroduce a modified version of Help to Buy, as the number of new homes built fell to its lowest level in almost a decade last year, with 208,600 properties completed in 2024/25.
Steve Turner, executive director of the Home Builders Federation, said any such scheme would be welcomed, adding: “The lack of government support amidst a death of affordable mortgage lending is suppressing effective demand for new homes, preventing young working people from getting on the housing ladder and stifling investment in new private and affordable housing.”
The number of first-time buyers has been falling in recent years, especially in London. The most recent available government figures show that in 2023 the number of first-time buyer mortgages fell to their lowest level since 2013 – the year Help to Buy was introduced – at 282,000.
But as the average UK house price hit a new high of £300,077 last year, first-time buyers took on a record £82.8bn worth of debt, according to estate agent Savills.
Meanwhile, the number of homeowners aged between 25 and 34 plummeted from 54.2 per cent in 2003 to 34.3 per cent in 2013, before partially rebounding to 39 per cent in 2023.
Expert housing market analyst Neal Hudson said, despite the Tories’ Help to Buy scheme successfully boosting the new build market, higher interest rates mean a new Labour version would not be guaranteed to do the same.
He said: “Thanks to high interest rates, there aren’t enough people who can afford to buy new build homes at the price that housebuilders can profitably build them.
“Monetary policy is currently explicitly trying to dampen demand across the economy [to keep inflation down], with the mortgage market being one of the most direct ways to do that. A new equity loan would in effect undo that, especially if it’s explicitly trying to boost demand.”
Speaking to The i Paper in December, Reeves suggested that while she wouldn’t rule out a Help to Buy-style intervention, she was focused on using other measures to boost the housing market.
She said: “Housebuilding is really important, and that’s why we’re ripping up and reforming all the planning rules [and] making housing more affordable. The best way to do that is to bring interest rates down by returning stability to the economy.”
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It was former Labour prime minister Gordon Brown who first launched the idea of government-backed homeownership with Help to Buy’s forerunner, Home Buy Direct, in 2008.
However, the scheme was closed shortly after Labour was voted out of office at the 2010 general election, having helped around 10,000 homebuyers.
A Government spokesperson said there are no plans to announce a new version of the Help to Buy scheme at this stage.
However, they added: “We want as many people to buy a home as possible, and we are committed to ending this chaos with the biggest shake-up of home buying in Britain’s history – cutting weeks from the process and saving first-time buyers £710 on average.
“This is on top of our new investment of £39 billion over the next decade to deliver the biggest boost in affordable and social housing in a generation.”
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