Concerns have been raised that Labour’s revived ‘Help to Buy’ scheme could exclude thousands of Londoners getting onto the property ladder because of household income limits.
The new Your First Home scheme is aimed at helping first-time buyers who cannot rely on financial support from the “bank of mum and dad”. Under the proposals, eligible buyers would receive a 20% equity loan towards the purchase of a new-build property, with an initial interest-free period and a minimum deposit requirement of just 2.5%.
Income threshold concerns
Questions have been raised over whether the scheme’s income thresholds adequately reflect London’s higher house prices and salaries, potentially leaving some households unable to qualify. To be eligible, first-time buyers in London must have a combined household income of no more than £90,000.
This could mean couples working in jobs such as teaching, nursing or policing miss out on the scheme. For example, the average civil servant earns around £42,000 a year, while nurses and teachers earn around £45,000 and police officers around £48,000. Although salaries vary depending on experience and pay grade, a police officer earning £48,000 and a teacher earning £45,000 would have a combined household income of £93,000, putting them £3,000 above the proposed eligibility threshold.
Mayor’s Question Time
The concerns were raised during Mayor’s Question Time at the London Assembly this morning, where London Mayor Sadiq Khan backed the scheme but confirmed City Hall was lobbying the government to raise the income threshold for Londoners. He also raised concerns about the previous scheme, warning that sellers could push up property prices if they knew buyers were receiving government support.
Lord Shaun Bailey of Paddington criticised the proposed London threshold, suggesting “you have a PM that doesn’t understand housing in London.” Responding to the concerns, Mr Khan said: “There are two big issues. One is that people eligible to take advantage of the Your First Home scheme. Secondly is the amount - the cost of property - in terms of what is eligible and on both of those things we are lobbying the government.”
Business warnings
Lord Bailey also pointed to research by the London Chamber of Commerce and Industry (LCCI), which represents 12,000 businesses, warning of a ‘serious risk that this will benefit almost nobody in London.’ In a letter to Andy Burnham, seen by The Telegraph, the LCCI said there was a “serious risk” the Government was creating a new housing scheme that “almost nobody in London and the South East can actually use”.
The LCCI has also warned that strict income limits could discourage workers from accepting pay rises if higher earnings would make them ineligible. It estimated that fewer than 5,000 Londoners would currently be able to use the scheme to purchase a completed home if it were introduced immediately.
Changes from previous scheme
The proposals mark a significant change from the previous Help to Buy scheme, which ended in 2023 and did not impose a household income cap. Under the former scheme, buyers in London could also access an equity loan of up to 40% of the property's value, compared with 20% elsewhere in England, reflecting the capital’s higher house prices. There has so far been no indication that London buyers would receive a similarly enhanced equity loan under the new scheme.
