The case for a new equity loan scheme

A new equity loan scheme could support an additional 100,000 new homes sales by March 2029. This would minimise the loss of construction capacity from housebuilders and enable housing delivery to increase at a faster pace, while also supporting homeownership for those facing affordability issues. 

For a demand-side support scheme to have a significant impact on the sales of new homes, it would need to open up access to homeownership for groups of people who may otherwise be excluded or would choose not to buy and instead remain in rented accommodation. 

The most obvious benefit of an equity loan scheme is that purchasers need smaller deposits. As it stands, first-time buyers face large barriers and many are priced out. Only 7.5% of all house purchases in the UK in early 2025 were made with a deposit of less than 10%, compared to 16% in 2007. 

An equity loan scheme also supports buyers with lower mortgage interest rates and lower mortgage borrowing relative to their income. For many, who might otherwise only be able to afford a property too small to accommodate their family, a support scheme would offer an opportunity to buy a home that is suited to their needs.

Lessons from Help to Buy

Reflecting on Help to Buy, the scheme was successful in quickly boosting new homes delivery and, for many people aged 25-34, it was the support they needed to start building stability through homeownership. However, the scheme was also criticised for inflating house prices and excessively profiting large housebuilders. Rather than abandoning the concept entirely, these criticisms could be used as a blueprint for improvement. 

Any scheme that might come into effect should implement measures which include clear controls on new homes pricing, ensuring sufficient land supply to respond to increased demand for both PLCs and SMEs, setting conditions around affordable housing delivery and firm targeting of the scheme for those who need it most.

Designing a new financial support scheme is a balancing act. A scheme is needed that ensures public support and demand from first-time buyers, but does not deter uptake from developers and homebuyers by being too prescriptive . 

By striking this balance, momentum in the housing market can be reignited, helping first-time buyers make their first start on the housing ladder. 

Further information

Contact Emily Williams