New research has urged the government to expand its new Your First Home scheme to secondhand homes to prevent inflated prices of new-build homes
The Your First Home scheme, championed by Prime Minister Andy Burnham, will offer first-time buyers in England a 20% government equity loan with a 2.5% deposit, specifically targeting those who cannot rely on family financial assistance.
However, research from SAM Conveyancing suggests this could significantly inflate the average price of new-build homes. They already command a 40.1% premium over established properties, averaging £396,889 compared to £283,194 for an existing home.
The supply myth of government equity loans
Official figures from the Department for Levelling Up, Housing and Communities show that over 387,000 properties were purchased using the Help to Buy equity loan between April 2013 and March 2023, supporting 328,000 first-time buyers.
While the programme assisted roughly 11% of all first-time buyers during that decade, it simultaneously created a captive market, accounting for between 35% and 50% of private new-build sales for major commercial housebuilders.
Rather than stimulating a sustainable surge in construction, housing delivery remained flat throughout the scheme. Data shows annual completions averaged just 152,791 dwellings per year between 2013 and 2023.
Government loans have a pattern of inflating asking prices
Instead of boosting volume, government equity disproportionately inflated asking prices. HM Land Registry figures reveal that when Help to Buy launched in April 2013, the average new build in England and Wales cost £208,086, compared to £163,745 for an existing home.
By the time the scheme closed in March 2023, new-build values had soared by 70.1% to £353,867, comfortably outstripping the 65.6% rise across established homes.
Andrew Boast, CEO of SAM Conveyancing, commented: “Help to Buy was presented as a cure for Britain’s housing crisis, but the data proves it functioned primarily as a price-support mechanism for volume housebuilders.
“Over 387,000 homes were bought using the equity loan, and while that gave 328,000 first-time buyers an initial foothold, it also funnelled them into a captive market where developers simply baked that extra purchasing power straight into their asking prices.”
It’s crucial to expand Your First Home to the secondhand market
To prevent another artificial price bubble, SAM Conveyancing has urged the Treasury to widen the scope of the Your First Home programme 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 organic market liquidity.
Boast explained: “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.”
He concluded: “If the chancellor genuinely wants to get Britain moving, he should let first-time buyers use this scheme on any property they choose.
“Backing purchases with independent professional valuations gives buyers real freedom, cuts out the developer red tape, and finally unfreezes the chains so first-time buyers can move in, and young families can move into their next home.”
