Labour Revives Help to Buy With 2.5% Deposits in Housing Push

Labour is reheating the Conservatives' help-to-buy scheme, cutting required deposits for first-time buyers to 2.5% in a bid to jolt a UK housebuilding sector that Nils Pratley, writing in The Guardian, describes as "stuck in a funk."

The move, branded as the "Your First Home" scheme, revives a policy associated with a decade of Tory rule. Pratley argues the government had at least three reasons to hesitate until now.

The first is inflation. Subsidies thrown at the housing market carry risks at a moment when wider inflation — driven by energy prices and the Iran war — is on the march, according to Pratley's analysis.

The second is political awkwardness. The new scheme draws directly from the playbook of George Osborne, the former Conservative chancellor whose original help-to-buy programme defined housing policy for much of the 2010s.

The third is the spectre of Jeff Fairburn. The former boss of housebuilder Persimmon bagged a £75m bonus in 2018 as help to buy turbo-charged the value of his share-based incentives. The payout sparked a shareholder revolt at the company.

Pratley's warning is pointed: the government would look foolish if, in its desperation to meet its housebuilding targets — or just miss them by a smaller margin — it created more Fairburns.

Despite those risks, Pratley's verdict on the revival is pragmatic. He calls the modest reheat of help to buy "worth a try."

Turning to Osborne's playbook may look awkward for a Labour government, he concedes. But cutting deposits to 2.5% could deliver what the sector needs: demand-side pressure strong enough to get builders building again.

The scheme's details, set out in the government's announcement, target first-time buyers specifically — the constituency help to buy was originally designed to serve before its closure under the previous administration.

The calculation for ministers is a trade-off between two risks. Do nothing, and the housebuilding sector remains stuck while housing targets slip further from reach. Intervene, and the government risks inflating prices, enriching executives and repeating the political embarrassments of the last decade.

Pratley, The Guardian's financial editor, comes down on the side of intervention — albeit a modest one. The scheme as reheated is described as a scaled-back version of the original, suggesting officials have designed it with the excesses of the Fairburn era in mind.

The test now is execution. Whether a 2.5% deposit threshold can lift construction volumes without reigniting house price inflation will determine if Labour's gamble on an Osborne-era instrument pays off.