Prime Minister Andy Burnham is to introduce a new scheme to try to help young people get on the property ladder.
The “Your First Home” scheme would be open to first-time buyers in England with a deposit of 2.5%. It would provide them with a loan worth 20% of their new build property’s value to help pay for the purchase.
Burnham said people who do not have support from the “bank of mum and dad” are among those the scheme would aim to help.
Labour said there would be an initial interest-free period for the equity loan. Further details on the scheme are expected in next month’s Budget and pre-registration will open before the end of the year.
Burnham said: “Too many young people are struggling with the cost of housing, with many giving up hope of ever having a home to call their own.
“So we will step in to help more first-time buyers onto the housing ladder.”
The PM added he believes the scheme will give builders the “confidence to deliver the high-quality new homes the country needs”.
Funding for the scheme is expected to come from reprioritising existing budgets; but housing developers will pay towards the running costs.
Ministers have not yet confirmed whether there is an age restriction on the scheme, or a cap on the price on the value of the property.
The announcement came as Burnham arrived in Liverpool ahead of his first Labour Party conference since becoming prime minister.
The policy is similar to initiatives from previous governments, including the coalition’s Help To Buy scheme, introduced in 2013 by then-Chancellor George Osborne.
It expanded a previous scheme, known as FirstBuy, which was aimed solely at first-time buyers.
Help to Buy initially enabled all purchasers to put down a 5% deposit on a newly built home. Up to 20% of the cost of the home was funded by a shared equity loan, which was interest-free for the first five year.
Housing Secretary Angela Rayner said Your First Home would “build on the lessons learned from previous schemes, while retaining the benefits”.
“We’re delivering a new generation of equity loans in a Labour way, targeting support to those first-time buyers who need support the most,” she said.
Rayner told the BBC earlier this month that there was only a “slim chance” the government would meet its target of building 1.5m homes in England by the next election, but said she was “not giving it up”.
Data up to June this year suggested the government was behind on the rate of construction needed to meet the goal, which housebuilders have previously warned was too optimistic.
BBC Verify analysis showed a decline in the number of new houses being built during Labour’s first year in power – continuing a fall that began under the Conservatives.
