Households earning more than £90,000 are set to be excluded from Andy Burnham’s revived Help to Buy scheme.
Couples on comparatively modest incomes will be unable to access the initiative to help first-time buyers on to the housing ladder.
Failing a last-minute change of heart within Whitehall, the £90,000 cap is expected to be applied to those buying houses outside London, rising to £110,000 inside the capital.
Such constraints will mean a teacher and nurse couple may not qualify for the scheme. Median teacher pay is £51,048 and nurses’ average salary is £44,053, according to the government and NHS, respectively.
But industry analysis suggests that the “Your First Home” scheme would enable approximately 650,000 households to get onto the housing ladder, depending on the total amount of money set aside by the Treasury for the initiative.
Burnham and Angela Rayner, the housing secretary, unveiled the “ Your First Home” scheme three weeks ago to target people that the prime minister said “have given up hope of ever having a home to call their own”. It will be open to first-time buyers in England with a deposit of 2.5 per cent.
The state will provide a loan of up to 20 per cent of their new-build property’s value. There will be an interest-free period on the borrowing from the scheme.
The scheme differs from Help to Buy, which was announced by George Osborne in 2013 and ran until 2022, by applying a cap based on the household income of applicants.
It is thought that Labour was poised to announce the £90,000 and £110,000 limits when unveiling the scheme ahead of its party conference in Liverpool. But an 11th-hour decision was taken to hold the information back and set it out at the budget later this month.
The delay means that the Treasury still has the opportunity to adjust caps. The government this weekend insisted “this is speculation as full details are yet to be set out”.
A spokesman for the housing department added: “By reducing the size of deposits and boosting the number of high-quality new homes, Your First Home will help support more hardworking people onto the housing ladder.”
Caps will also be applied to the value of property, as was the case with Help to Buy. Between 2013 and 2021, a blanket maximum property value of £600,000 was applied. This was changed in the final two years of the scheme to 1.5 times the average first-time buyer regional property price, meaning it varied from £186,100 in the North East to £600,000 in London.
Unlike Help to Buy, Burnham’s initiative will require developers to make a contribution. Details of this are also yet to be published. Industry sources said that the percentage would be crucial to the viability of the Your First Home scheme.
Private-sector housebuilders are understood to have told the government that they could cope with a contribution of about 2.5 per cent of the property value — effectively a discount on the selling price — but if this was nearer 5 per cent, it may not be financially viable.
The decision to revive Help to Buy follows ministers privately concluding that supply-side reforms such as cutting planning red tape were not enough to kick-start housebuilding.
Labour made a manifesto pledge to build 1.5 million new homes in England over the course of the parliament. Rayner has since insisted that this was always a “stretch target”.
