27th September 2026
The Government is bringing back a version of Help to Buy in England, but there is an important question hanging over the scheme.
What happens when you give more people the ability to buy homes in a market where there are still not enough homes?
The new scheme, called Your First Home, was announced on 26 September and is expected to be confirmed at next month's Budget. It is aimed at first-time buyers purchasing new-build homes from participating developers.
Under the proposed scheme, buyers would need a deposit of just 2.5%, with a government-backed equity loan worth 20% of the property's value. There will also be household income limits and local property price caps, with the precise details to be announced at the Budget.
The Government says the scheme is intended to tackle one of the biggest barriers facing first-time buyers: finding a large enough deposit.
It also has another objective. Ministers hope that giving people more purchasing power will encourage housebuilders to build more homes.
That sounds straightforward enough.
But there is a problem.
The Government has just published an independent evaluation of the original Help to Buy scheme, and it provides some evidence that helping people buy homes can also push up house prices.
What happened last time?
The original Help to Buy equity loan scheme ran in England from 2013 to 2023.
It provided government equity loans of up to 20% of the value of a new-build property, allowing buyers to put down a smaller deposit and take out a smaller mortgage.
More than 387,000 properties were purchased through the scheme, including around 328,000 bought by first-time buyers. The total value of the equity loans was £24.7 billion.
The newly published independent evaluation found that Help to Buy did increase housing supply.
The researchers estimate that around 15% of new-build homes constructed in England during the period 2013 to 2023 were attributable to the scheme.
That is significant.
The argument that Help to Buy simply handed buyers more money without producing any additional homes does not fit the evidence.
Developers reported greater confidence, more sites being opened and faster building, particularly during the early years of the scheme when the housing market was still recovering from the financial crisis.
But there was another effect.
More buying power can mean higher prices
The evaluation found that the introduction of Help to Buy was likely to have contributed to slightly higher property prices.
Its econometric analysis estimated that, during the first Help to Buy period, house prices on the English side of the England-Wales border were around 2% higher than they would otherwise have been.
The effect was greater in areas which were already relatively expensive.
The researchers therefore concluded that additional finance for buyers may have helped push prices upwards in areas where housing was already less affordable.
There was also a difference between new-build properties bought through Help to Buy and other new-build homes.
The evaluation found an average new-build premium of around 5% compared with similar existing properties, but the premium was about 6% for homes purchased through Help to Buy.
In other words, the analysis suggests there was an additional Help to Buy price premium of around 1%.
That does not mean every house price increase was caused by Help to Buy. The housing market is affected by interest rates, wages, mortgage availability, planning, land prices, construction costs and many other factors.
But it does demonstrate the basic economic problem.
What happens when demand rises faster than supply?
Imagine a town with 100 people who want to buy houses but only 20 suitable properties coming onto the market.
If the Government suddenly enables another 20 people to obtain mortgages, the number of potential buyers has increased.
But unless the number of houses also increases substantially, those extra buyers are competing for essentially the same limited supply.
That can push prices upwards.
On the other hand, if housebuilders respond by constructing another 30 or 40 homes, the additional demand can help generate additional supply.
This is essentially the argument behind the new scheme.
The Government says the housing market is currently facing difficulties because of higher construction costs and wider economic pressures. It expects the scheme to stimulate demand for new-build properties and give developers greater confidence to build. Developers will also be expected to make a contribution when joining the scheme.
The question is therefore not simply whether Help to Buy increases demand.
It almost certainly will.
The important question is how much additional housing supply follows that extra demand.
The previous Help to Buy scheme did not have the same effect everywhere.
The independent evaluation found that it helped increase first-time buyer mortgage sales, but the effect was much weaker in areas where housing was already relatively expensive.
Those were also the areas where prices increased most.
The result was that increasing the supply of housing did not necessarily translate into significantly improved access to home ownership in the least affordable areas.
The researchers found that around 46% of Help to Buy customers said they could not have bought a home without the scheme.
But 54% said they could have bought without it.
That raises another question about government housing subsidies.
Are they helping people who genuinely could not otherwise buy a home, or are they sometimes helping people buy a larger or more expensive property than they would otherwise have purchased?
The evaluation found evidence of both.
What about Scotland?
The new Your First Home scheme applies to England.
So it will not directly provide a new Help to Buy route for someone trying to purchase a home in Caithness.
But the underlying question is highly relevant to Scotland.
Caithness has a very different housing market from many parts of England.
The supply of new homes is relatively limited, construction costs can be high and there can be a significant difference between the price of a house and the wages available locally.
That makes the balance between helping buyers and increasing supply particularly important.
A policy which increases the amount people can borrow does not necessarily make houses more affordable in the long term.
If more money chases a limited number of properties, some of the benefit can potentially be captured by sellers through higher prices.
If it encourages developers to build substantially more houses, however, the outcome could be different.
That is the dilemma facing governments trying to solve the housing affordability problem.
Help for buyers or help for housebuilders?
There is another reason the new scheme will attract attention.
The previous evaluation found that Help to Buy had a positive effect on developers' financial performance, including revenues, profits and profit margins.
That does not necessarily mean developers were unfairly benefiting.
If a government scheme creates demand for new homes, housebuilders will naturally benefit from selling more homes.
But it does raise an important question about where the financial benefit of housing support ultimately ends up.
If a buyer receives government assistance worth tens of thousands of pounds, part of that assistance could potentially be reflected in the price of the property rather than remaining entirely with the buyer.
This is why housing subsidies are more complicated than they first appear.
The big test will be supply
There is a strong argument for helping people who have good incomes, can afford the monthly mortgage payments but simply cannot save a large enough deposit.
The Government's new scheme is designed partly around exactly that problem.
But the experience of the previous Help to Buy programme suggests that deposit assistance alone cannot solve the underlying shortage of affordable housing.
The new scheme may help some first-time buyers.
It may also encourage developers to build more homes.
But if the number of additional homes is too small compared with the increase in purchasing power, some of the benefit could show up in higher house prices.
And that could leave the next generation of first-time buyers facing an even larger deposit problem.
The Government's own evaluation perhaps puts the issue most clearly. Help to Buy succeeded in increasing housing supply and supporting home ownership, but it was also likely to have contributed to higher prices, particularly in areas where housing was already expensive.
So the success of Your First Home may ultimately depend on something rather less headline-grabbing than the size of the deposit.
It will depend on how many additional homes actually get built.
Because there is a fundamental difference between making it easier for someone to buy an expensive house and making houses more affordable.
The first can be achieved relatively quickly.
The second requires building enough homes.
And that is a much harder problem to solve.