The Conservative Party has announced plans to introduce a "new and improved" Help to Buy scheme as part of its manifesto for the General Election.

Under proposals announced this afternoon, the Party said that it would provide first-time buyers with an equity loan of up to 20%, which will be put towards the cost of a new build home.

Under the new plans, which are set to be enacted should the Conservative Party win the Election of 4 July, first-time buyers will be able to get on to the housing ladder with a 5% deposit on "interest terms they can afford".

Senior research economist at the Institute for Fiscal Studies, David Sturrock, said: "A new Help to Buy equity loan scheme could help potential homebuyers to get onto the housing ladder by reducing the deposit they require and making repayments more manageable in the short-term. The Conservatives’ proposed scheme would not only expand access to credit but also be a subsidy to the housing market because the equity loan is initially interest-free.

"While the Government may end up making a profit on the scheme if house prices rise, experience from past schemes suggests that some of the subsidy will be captured by developers in the form of higher prices and profits and that some who buy would be able to do so without the scheme. Any new scheme should seek to learn lessons from the past."

The party said that the scheme would be part-funded by contributions from housebuilders.

Furthermore, the Conservatives have pledged to continue to the mortgage guarantee scheme, which it claims has already helped over 40,000 households to buy a home, while supporting families to buy through shared ownership.

Financial planner at Quilter, Holly Tomlinson, added: "The Help to Buy equity loan would need to be carefully considered by the Conservatives to ensure it meets its intended outcomes.

"What’s more, the scheme also had significant implications for house builders. By increasing demand for new-build homes, the scheme effectively lined the pockets of these developers. As more buyers were able to access funds to purchase new homes, builders saw an increase in demand, which likely contributed to the rise in house prices. This increase in demand, fuelled by government-backed loans, provided a substantial financial boon to the construction industry. However, this benefit to builders came with the caveat that it may have contributed to inflating house prices, making the market less accessible in the long run.

"Ultimately, prospective first-time buyers have faced significant challenges and financial pressures in recent years, so this may be too little too late when it comes to currying favour with voters. Nonetheless, should the Conservatives be re-elected, it would be imperative that the scheme is thoroughly considered and does not allow what is intended as a helping hand to turn into a burdensome load."

---