New Budget measures could help first-time buyers onto the property ladder, but they should carefully consider the long-term costs of government-backed loans, a North West property law expert says.
John Healey delivered his first Budget as Chancellor on October 28, announcing several new housing measures.
These include the new ‘Your First Home’ loan scheme to support first-time buyers and the introduction of the ‘First Time Buyer ISA’, replacing the Lifetime ISA for new savers. The penalty for withdrawals from the existing Lifetime ISA has also been lowered.
Jennifer Prysiaznyj, Director and Head of Residential Conveyancing at WHN Solicitors, examines the new measures affecting the residential property market and considers whether they will make it easier for first-time buyers to get onto the property ladder.
Your First Home scheme (April 2027)
The £4.7bn equity loan scheme is intended to support 70,000 first-time buyers in England. Under the scheme, new-build homes can be purchased with a deposit as low as 2.5 per cent, supported by a government equity loan covering 20 per cent of the purchase price.
That loan will be interest-free for five years, with 1.5 per cent interest in year six and 3 per cent from year seven. Household income limits of £110,000 outside of London and £140,000 inside London will apply.
The scheme represents an easier route on to the property ladder for first-time buyers and therefore looks attractive in the first instance. I would urge buyers to consider carefully what happens after the five-year interest-free period. In the previous Help to Buy equity loan scheme, we found people struggling to remortgage at the end of their interest-free period on the equity loan.
Lower mortgage interest rates would help, as borrowers under the previous Help to Buy equity loan scheme experienced issues once interest charges kicked in. We saw several homeowners suddenly facing an additional monthly outgoing and, in some cases, relying on financial support from their parents.
Buyers also ought to be wary that the loan is linked to the value of their home, meaning the amount they owe could increase if house prices rise. Applications for the scheme are expected to open in February 2027, with pre-registration available before the end of December 2026.
First Time Buyer ISA (April 2029)
The new First Time Buyer ISA will replace the Lifetime ISA for new savers and allow annual contributions of up to £4,000 with a 25 per cent government bonus.
In some respects, this takes us back to the Help to Buy ISA, which had a property price limit of £250,000 outside Greater London and £450,000 within Greater London. Now, the limit is simply £450,000 across England.
Even in the North West, we were finding that £250,000 for a first property was sometimes not enough. The best elements of the Help to Buy ISA and Lifetime ISA have essentially been combined in a new savings product.
Previously, the Help to Buy bonus amount was capped at £3,000, meaning you could receive no further bonus once you had saved £12,000. The new ISA will offer a maximum government bonus of £20,000, payable when money is withdrawn for a qualifying first-home purchase.
The government may yet look back at the £450,000 limit and change it. They are trying to help people get onto the ladder, but buyers in more expensive areas may struggle to find available homes within that price range.
Existing Lifetime ISA holders will be able to continue using and adding to their accounts.
Reduced Lifetime ISA withdrawal penalties (October 29, 2026)
From October 29, 2026, the withdrawal charge for using Lifetime ISA savings towards a first home costing more than £450,000 was reduced from 25 per cent to 20 per cent. We had regularly seen buyers at the higher end of the market affected by the previous penalty.
The 25 per cent penalty meant buyers lost not only the government bonus but some of their own savings as well. Buyers should now be able to retain more of their original savings when withdrawing money to buy a property costing more than £450,000.
With the previous Help to Buy ISA, you could withdraw savings at any time, even if choosing not to buy a property. However, the government bonus was only available when purchasing a qualifying home costing up to £250,000, or £450,000 in Greater London. if savings were used to purchase a qualifying property.
Will the measures make a difference?
The government is trying to help first-time buyers and get the housing market moving, given the uncertainty within it. We are noticing more deals falling through and an increase in gazundering, which is when a buyer lowers their agreed offer on a property at the last minute.
We are seeing strong buyer demand, so I think the government’s idea is to encourage more first-time buyers onto the property ladder and generate natural property chains.
I would have been in favour of new stamp duty measures, as costs are becoming prohibitive for buyers now. Simplifying stamp duty would be welcomed across the conveyancing profession.
Nevertheless, the measures are welcome and should generate slightly more interest while providing a way of saving a deposit – which is the big issue. Wider affordability concerns and uncertainty within the market, however, will not disappear overnight.
Jennifer Prysiaznyj has more than 20 years’ experience as a solicitor. She has expertise across all aspects of residential conveyancing and specialises in Islamic finance, having dealt with more than 1,000 cases since 2005.
Jennifer is based at WHN’s Blackburn office and heads the firm’s conveyancing team, having originally joined the firm in 2018. The team can advise on sales, purchases, remortgages, charges, right to buy, flats, new builds, shared ownership and help to buy.
Contact Jennifer on 01254 272643 or jennifer.prysiaznyj@whnsolicitors.co.uk
