Prime Minister Andy Burnham is to introduce a new scheme to try to help young people get on the property ladder.
The “Your First Home” scheme would be open to first-time buyers in England with a deposit of 2.5%. It would provide them with a loan worth 20% of their new build property’s value to help pay for the purchase.
Burnham said people who do not have support from the “bank of mum and dad” are among those the scheme would aim to help.
Labour said there would be an initial interest-free period for the equity loan. Further details on the scheme are expected in next month’s Budget and pre-registration will open before the end of the year.
Burnham said: “Too many young people are struggling with the cost of housing, with many giving up hope of ever having a home to call their own.
“So we will step in to help more first-time buyers onto the housing ladder.”
The PM added he believes the scheme will give builders the “confidence to deliver the high-quality new homes the country needs”.
Funding for the scheme is expected to come from reprioritising existing budgets; but housing developers will pay towards the running costs.
Ministers have not yet confirmed whether there is an age restriction on the scheme, or a cap on the price on the value of the property.
The announcement came as Burnham arrived in Liverpool ahead of his first Labour Party conference since becoming prime minister.
The policy is similar to initiatives from previous governments, including the coalition’s Help To Buy scheme, introduced in 2013 by then-Chancellor George Osborne.
It expanded a previous scheme, known as FirstBuy, which was aimed solely at first-time buyers.
Help to Buy initially enabled all purchasers to put down a 5% deposit on a newly built home. Up to 20% of the cost of the home was funded by a shared equity loan, which was interest-free for the first five year.
