How to make John Healey's Your First Home scheme a success: Tom Simpson

The need for action is clear. Our ‘No Way Home? Restoring Britain’s Housing Ladder’ research found that just 11 per cent of renters aged 20 to 44 in England are currently in a financial position to buy a home. For many aspiring homeowners, affordability pressures, deposit requirements and limited support continue to put homeownership beyond reach.

Your First Home recognises that challenge. A smaller deposit and mortgage could make a meaningful difference for some buyers, and the first-time buyer focus, household income limits and local property price caps should make the scheme more targeted than its predecessor.

The test, however, should not simply be how many applications the scheme generates. It should be whether it helps people who could not otherwise buy to achieve sustainable homeownership, while supporting additional housing supply and avoiding unnecessary pressure on prices.

Saving for a deposit remains one of the biggest barriers facing first-time buyers, with many renters able to meet substantial monthly housing costs, but unable to build the lump sum needed to secure a mortgage. Reducing that upfront barrier therefore has considerable merit.

But the scheme cannot solve the housing challenge on its own. Deposit constraints, mortgage affordability, housing supply and the ability of existing homeowners to move are interconnected.

Sustainable reform needs to address the whole housing ladder, not just one rung in isolation.

The challenge for Your First Home is to ensure its final design and implementation make it effective in practice, and there are three areas that should remain in focus as the scheme is implemented.

Firstly, while there is a clear rationale for using the scheme to support new housebuilding, we continue to believe there is a strong case for extending support over time to suitable existing and repurposed homes. That would give buyers greater choice, support regeneration and help the wider housing ladder move, particularly in areas where new-build supply is limited.

Secondly, the household income limits and local price caps must work together to direct support towards buyers who genuinely need it. The scheme’s effectiveness should be judged by whether it helps households who would otherwise have remained locked out, rather than by total transaction or lending volumes alone.

Thirdly, the scheme must support sustainable homeownership, not simply make the initial purchase possible. Lenders will need to assess affordability responsibly, while buyers should be given a clear picture of how their costs could change when equity-loan interest begins in year six, as well as how the amount ultimately repayable will move with the value of their home. The arrangements for remortgaging, moving home and supporting customers in financial difficulty must also be clear and workable.

We would urge ministers to continue to work closely with lenders, developers and housing experts as the remaining rules and customer journeys for the scheme are finalised.

The bottom line is, if Your First Home reaches people who genuinely need help, supports additional supply and creates sustainable homeowners, it can make an important contribution.

But it should form part of a wider effort to restore movement, choice and opportunity across Britain’s housing ladder.

Tom Simpson is Managing Director of Homes for Yorkshire Building Society