Charlie Lamdin warns the scheme could trap first-time buyers in negative equity for years
Andy Burnham's Your First Home scheme – expected to allow eligible first-time buyers to purchase new-build properties with a 2.5% deposit and a 20% government-backed equity loan – risks repeating the mistakes of Help to Buy without solving the underlying affordability crisis.
Charlie Lamdin (pictured top), founder of housing marketplace BestAgent, argues that expanding buyers' borrowing power through an equity loan will simply capitalise into house values, pushing prices higher and leaving first-time buyers worse off in the long run.
A debt solution to a debt problem
Lamdin's central objection is structural. Every time lending expands, that extra borrowing capacity gets priced into the market, making homes less affordable for everyone.
"It's like solving an addiction problem with more of the same drug," he told Mortgage Introducer. "A government equity loan is more lending. And when you expand the amounts being lent on a per-person basis, that expansion gets capitalised into house values and makes them even less affordable."
The concern is compounded by conditions buyers face today. Under Help to Buy, which ran from 2013 to 2023, house prices were rising sharply and mortgage rates sat below 2%. Neither of those tailwinds exists now.
"You're taking on 97.5% borrowing in total at much higher interest rates to buy a product, not a home," Lamdin said. "When it's new, it's a product that, immediately the day you walk through the front door for the first time, you're walking into negative equity. Under current circumstances, you’re unlikely to emerge from that for seven years. It's a terrible deal in this climate."
Lamdin's position draws support from the MHCLG's independent evaluation of Help to Buy, published on 15 September by Verian, Sheffield Hallam University and Alma Economics. The evaluation found that 54% of customers said they could have bought a home without the scheme, often using it simply to purchase a larger or higher-quality property. It also found that Help to Buy homes carried a 1% additional price premium over comparable new builds not sold through the scheme.
To illustrate the risk, Lamdin cited a borrower from the original scheme who shared their outcome publicly: "I'm in year six of the last Help to Buy scheme, and I'm about to lose £150,000 on my new-build flat I bought for £460,000. Worst decision of my life. It will be a complete car crash." That came under a scheme requiring a 5% deposit. Your First Home asks for only 2.5%.
What brokers should tell first-time buyer clients
Lamdin is direct about the duty mortgage brokers carry when clients come asking.
"Any broker that doesn't make the warning clear is not doing their job," he said. "If you do this, understand you walk in the door on day one and the value is going to drop below what you paid for it. And house prices aren't going up sharply for any foreseeable period. So if you are okay with being in negative equity for that many years because having a home is more important than making money from it, then okay."
He draws a distinction between buyers who might defensibly use the scheme – those buying a freehold house with stable income and no plans to move for a decade – and those who risk serious harm, such as a buyer of a leasehold flat with a five-year horizon.
"I don't blame anyone for taking it if they understand the financial ramifications," he said. "But it's all about how it's done. Many brokers will mention the risks, but too often it comes out as, 'You've got to watch out for negative equity, but it should be fine'."
The scheme raises practical conduct questions for mortgage professionals advising first-time buyers in the UK around how risk is disclosed at the point of sale. One former Help to Buy borrower whose experience Lamdin cited said he would, in hindsight, have rented: "I'd wait until I had a 10% deposit, and I'd have bought a non-new build."
Government motivation and the supply-and-demand fallacy
Lamdin's sharpest criticism is reserved for what he believes lies behind the scheme – the government's need to appear on course for its 1.5 million homes target ahead of the Autumn Budget on 28 October.
"Their real reason for doing it is, if it stimulates housebuilding, it means they might hit their target," he said. "But there's no way they have any chance of hitting that target. They never had a chance of hitting it."
Supply-and-demand logic does not work for house prices as it does in rental markets, because ownership is distorted by leverage and the availability of credit, not simply by the number of units built.
"In the rental market, simple supply-and-demand laws do work – there's no debt, no leverage," he said. "But demand for people wanting to buy homes is much bigger than people actually buying homes. Millions of people would love to own their home. They just can't. They are unfinanced demand, but they don't affect the market because they can't get the money. So the supply-and-demand equation does not work for house prices, it's distorted by debt."
The remedy, he argues, lies in gradually reducing lending multiples and loan terms and prioritising employment, not expanding credit. Lower house prices and higher mortgage volumes are aligned outcomes, a point he believes the wider UK mortgage and lending industry has been slow to accept.
"If house prices were more affordable, more people would take out a mortgage and buy a home," he said. "The whole lending and moving industry has relied on the idea that everyone should buy because house prices always go up. For a while, it worked. But then it started to have ever-diminishing returns, and now it's actually become the reason there aren't more transactions."
His verdict on Your First Home is blunt: "It's a really disappointing setback on the road to affordable homes."
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