UK Considers Higher Income Limit for First-Time Buyer Loan Scheme

The British government is expected to increase the income threshold for its new 'Your First Home' scheme, potentially allowing households earning up to £110,000 to apply for loans aimed at first-time buyers in England. For purchases in London, the earnings limit could be set as high as £140,000.

The 'Your First Home' scheme, announced by Prime Minister Andy Burnham, will provide government-backed equity loans covering 20% of the cost of new-build properties from participating developers. These loans, which will include an initial interest-free period, are designed to enable individuals to purchase homes with deposits as low as 2.5%.

Previous government initiatives to assist first-time buyers did not have income restrictions. However, these programs faced criticism for potentially inflating house prices by benefiting relatively affluent households.

Ministers initially considered lower income caps, £90,000 outside London and £110,000 within the capital. This approach was reportedly reconsidered after it was determined that too many middle-earning couples, such as teachers and nurses, would be excluded from the scheme.

The government also anticipates that the scheme will stimulate housebuilding. This comes as ministers have acknowledged that they are likely to miss a target of constructing 1.5 million homes in England before the next general election. Details regarding the updated income caps and other specifics of the scheme are expected to be confirmed in the upcoming Budget.