Why will first-time buyers only be able to buy new-builds with Labour's home scheme... and should it be extended?

In September, the Government announced Your First Home, the long-awaited replacement for Help to Buy.

The scheme will give first-time buyers the opportunity to buy a home with a 2.5 per cent deposit. 

They will be offered an equity loan worth up to 20 per cent of the property's value, cutting mortgage costs in the first few years of home ownership – though it will only be interest-free for a limited period.

Some aspiring homeowners might be disappointed by the scheme, however. 

This is because, like Help to Buy, Your First Home can only be used when purchasing a new-build property from a developer. 

Some property experts are calling on the Government to extend it to first-time buyers purchasing properties that aren't new. 

We look at why the Government has been less keen to provide help to those buying older homes, and whether that stance could change.  

Why doesn't Your First Home cover older homes?

Fundamentally, the Government offers support to first-time buyers because it wants to boost the housing market. 

By restricting its schemes to new-build properties, it hopes demand for them will go up and that housebuilders will build more homes, benefiting the economy.  

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: 'The government’s new Your First Home Scheme is aimed at those buying new-build homes because they want builders to build more homes. 

'The hope is that increasing demand for such homes will encourage developers to build more to satisfy that demand.'

Should Your First Home scheme be expanded?   

The argument against Help to Buy was that it artificially inflated the price of new build homes, by handing people interest-free loans to buy them with. 

First introduced in 2013, Help to Buy gave first-time buyers the chance to buy a home with a 5 per cent deposit. The scheme could only be used for new-build homes and ran until 2022. 

Under Help to Buy, the Government would lend first-time buyers between 5 per cent and 20 per cent of the cost of a new-build home as an equity loan. In London, this was up to 40 per cent. 

Interest was charged after five years and the percentage borrowed had to be repaid after 25 years, or earlier if the property was sold. 

Official figures from the Ministry of Housing, Communities and Local Government showed that more than 387,000 properties were purchased using the Help to Buy equity loan between April 2013 and March 2023, supporting 328,000 first-time buyers. 

The value of properties sold via the Help to Buy scheme reached about £109.2billion, strengthening the bottom lines of housebuilders. 

In April 2026, the Institute for Fiscal Studies (IFS), a think-tank, said Help to Buy did not, as intended, help make homes affordable for many people because it was limited to being used on new builds, which were 'relatively rare in most areas'. 

The IFS also said Help to Buy in England made only a 'limited difference to housing affordability'.

This week, research from SAM Conveyancing estimated that the Help to Buy Scheme inflated new-build property prices by 70.1 per cent. 

At the same time, it said housing delivery stagnated at an average of 152,791 completions per year, well below the 2007 peak of 223,590. 

The firm concluded that 'injecting billions of pounds into the new-build sector through government equity loans inflated house prices while doing little to stimulate construction'. 

Data from HM Revenue & Customs shows that new-build homes now typically command a 40.1 per cent premium over existing homes, averaging £396,889 compared to £283,194 for an older home. 

To prevent another 'artificial price bubble', SAM Conveyancing has called for the Your First Home scheme to be extended to existing homes rather than just new-builds, claiming that this would provide a boost to homeowners as well as housebuilders. 

Andrew Boast, chief executive, said: 'Housing completions remain stagnant, running at less than half of the government's target. 

'Repeating this policy by restricting the incoming Your First Home scheme solely to new developments will not magically double our construction capacity overnight - it will simply pump billions in state support into developer balance sheets.

SAM Conveyancing has urged Labour to widen the scope of the Your First Home scheme to encompass all property types across the secondhand market. 

Allowing buyers to use government equity loans on established freehold houses and existing flats would transform the policy from a developer subsidy into a catalyst for property market activity, Boast said. 

He added: 'Thousands of existing homeowners are stuck in starter properties because incoming buyers struggle to raise conventional deposits. 

'Opening the equity loan to existing properties allows first-time buyers to purchase established homes, freeing current owners to step up to larger properties and restoring natural fluidity across the entire chain.

'Purchasing an existing home also removes the instant depreciation that occurs when moving into a newly built development, protecting buyers from early negative equity.'

What is the counter argument? 

Others think Your First Home should stick with new-builds only, as this would provide  a bigger boost to home building. 

Paul Rickard, chief executive of property developer Pocket Living, said: 'That we have seen a collapse in housing development starts at the same time as there being no meaningful support package to help first-time buyers onto the ladder in nearly 60 years is no coincidence.

'Your First Home is not only aimed at supporting people to buy their first home, but it will also stimulate new housing delivery, including affordable and social homes, in a climate of challenging new build sales, hence targeting the programme at new homes.'

More details about Your First Home, including potentially when it will launch, are likely to be announced in Chancellor John Healey's Budget on October 28.