Labour considers new Help to Buy scheme for first-time buyers

Benedict J Smith

Wed 11 February 2026 at 10:25 pm GMT+9 3 min read

Labour is considering plans to introduce a new version of the discontinued Help to Buy scheme amid a slump in demand for new homes.

The Government is evaluating the impact of George Osborne’s controversial equity loan initiative as it faces growing pressure from housebuilders to help boost flagging demand.

The scheme, which ran from 2013 to 2022, allowed first-time buyers to purchase a new-build property with a 5pc deposit and a government-backed loan of up to 20pc – rising to 40pc for London properties.

The Ministry of Housing is understood to be exploring ways of supporting more first-time buyers, with a report on the impact of previous rounds of Help to Buy to be published in the spring.

One industry source, who attended the meetings, told The Telegraph a similar scheme was on the table, but officials said no decision had yet been made. The Treasury, Homes England and the Resolution Foundation think tank are believed to be among those who provided input.

At a committee meeting on Tuesday, Matthew Pennycook, the housing minister, said: “We are doing things in this space… we have no current plans for a replacement Help to Buy scheme, but we will continue to have those discussions.”

The meeting insider said the evaluation process had “disproved a lot of myths” about the Conservatives’ equity loan scheme and predicted any new buyer support would include contributions from developers.

It comes after sales of new-build homes fell to their lowest level since the global financial crisis last summer, according to figures from Savills estate agency, while sales in the capital hit a record low.

Housebuilders have warned that unless they receive government support to stimulate demand, they will struggle to hit Labour’s target of delivering 1.5 million new homes by 2029.

Steve Turner, of the Home Builders Federation, said planning reforms would be wasted without corresponding demand-side measures.

He said: “You’ve got to have confidence that you’ve got a market to sell your homes into.

“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.”

However, any new scheme would need to address criticisms levelled at the previous Help to Buy initiative.

Despite supporting around 40pc of new-build sales, the scheme at the time was roundly blamed for inflating house prices and lining developers’ pockets.

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Between 2012 and 2019, profits at the housebuilder Persimmon trebled, with the York-based developer making more than £1bn in both 2018 and 2019.

The premium it placed on new-builds meant many buyers also experienced significant losses when they came to sell. Because borrowing costs increased once the Government’s equity loans stopped being interest-free after five years, it risked leaving homeowners trapped in negative equity with rising monthly fees.

Emily Williams, at Savills, said, “We’d need to be careful about how any scheme was designed, particularly the London equity loan scheme, where you could get 40pc.

“You want a scheme that recognises the nuances of local markets – not a blanket scheme.”

Mr Turner said that a new initiative would be in the Treasury’s interests after it earned more than £1bn during Help to Buy’s lifetime from loan repayments when properties were sold. It provided a total of around £24bn in equity loans to 387,000 homebuyers – 330,000 of which were first-time buyers.

A Ministry of Housing spokesman said: “We do not comment on leaks, and there are no plans for another Help to Buy scheme. 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.”

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