When the Chancellor announced new help for first-time buyers in the Budget on 28 October, it felt familiar to us.
We moved our family of five from Canada to London this year. In Canada, a government equity loan to stretch a buyer’s deposit is not a new idea, and neither is a tax-free account for saving for a first home. Canada has run both, and it has years of data on who actually used them.
So rather than just list what’s in the Budget, we thought it would be more useful to show you what happened when Canada tried the same things, and what that could mean if you’re buying or selling in South West London.
What the Budget announced for first-time buyers
- Your First Home (England, new builds only). Buyers put down a deposit from 2.5%, the government lends 20% of the price as an equity loan, and a mortgage covers the rest. The loan is interest-free for the first five years, and the scheme is expected to open in spring 2027. Income and price caps apply, with higher limits in London.
- A new First Time Buyer ISA. It is expected to replace the Lifetime ISA for new savers in the coming years, with the government bonus paid when you buy rather than as you save.
- A smaller Lifetime ISA penalty. Using a Lifetime ISA to buy a first home over the £450,000 cap now costs 20% instead of 25%. In practice you lose the government bonus but no longer lose a slice of your own savings too. That matters in London, where many first homes cost more than £450,000.
- No change to stamp duty.
The full rules haven’t all been published yet. We’ll update this article when they are.
Canada’s version 1: the shared-equity loan
In 2019 Canada launched the First-Time Home Buyer Incentive. The national housing agency (CMHC) would fund 5% of the price of a resale home, or 5 to 10% of a new build. You paid it back when you sold or after 25 years, and the government shared in any rise or fall in the home’s value.
The aim was to help 100,000 families in three years. CMHC’s own 2023 evaluation counted 18,291.
Take-up was lowest in Ontario and British Columbia, home to Toronto and Vancouver, where help was needed most. The income and borrowing caps simply didn’t match what homes cost in expensive cities, and many buyers didn’t like giving the government a share of any future gain. Canada closed the scheme to new applications in 2024 and pointed buyers to its newer savings tools instead.
What this means for London: an equity loan only works if the caps fit the local market. Your First Home is far more generous than Canada’s scheme (20% against 5 to 10%), and it has higher limits for London. The UK also already knows this model from Help to Buy. But Your First Home only covers new builds from developers who sign up. In South West London that will mostly mean flats in larger developments, not a Victorian terrace off Northcote Road.
Canada’s version 2: saving for a deposit
Canada has two ways to save for a first home.
- The RRSP Home Buyers’ Plan (since 1992). You can borrow up to C$60,000 from your own retirement savings and pay it back over 15 years. If you miss a repayment, that amount is added to your taxable income for the year.
- The First Home Savings Account (FHSA, since 2023). You can save up to C$8,000 a year, up to C$40,000 in total. You get tax relief on what you put in, and nothing is taxed when you take it out to buy a first home. By 2024, nearly 1.5 million Canadians had one.
The UK’s version of this is the ISA. The First Time Buyer ISA will do much the same job as the FHSA, with a government bonus instead of tax relief. What the UK doesn’t have is a pension option like the Home Buyers’ Plan. Letting first-time buyers use their pension for a deposit has been suggested before, but it wasn’t in this Budget. More on that below.
What this means: simple help gets used. Canada’s equity loan helped around 18,000 buyers. Its simple savings account had nearly 1.5 million savers within two years.
UK and Canada side by side
| UK (Budget 2026) | Canada | |
|---|---|---|
| Equity loan | Your First Home. 20% loan, new builds only, expected spring 2027. | First-Time Home Buyer Incentive. 5 to 10% loan, 2019 to 2024, now closed. |
| Save with government help | Lifetime ISA now, First Time Buyer ISA later. Government bonus. | First Home Savings Account. Tax relief going in, tax-free coming out. |
| Use your pension | Not available. | RRSP Home Buyers’ Plan. Up to C$60,000, repaid over 15 years. |
Should the UK go further?
Canada’s Home Buyers’ Plan raises an interesting question for the UK. Since 1992, Canadians have been able to take money out of their own retirement savings for a deposit with no penalty, as long as they pay it back over 15 years.
The UK equivalent of that retirement account is a pension. So should first-time buyers here be able to borrow from their own pension for a deposit, and pay it back over a set number of years?
There’s a London question too. A Lifetime ISA can already be used for a first home with no penalty, but only if the home costs £450,000 or less. Above that, buyers lose 20% of what they take out. Should buyers above the cap be able to withdraw their savings without the penalty if they pay the money back?
Either change would help the people London’s schemes tend to miss: buyers with savings locked away, but not enough cash for a London deposit. Neither costs the taxpayer a bonus or an equity loan. They just let people use their own money.
Both would need guardrails. Canada adds missed repayments to your taxable income. A UK version could add automatic repayments from salary, and limits so buyers don’t weaken their retirement savings.
We’d be interested to hear what you think.
What it means if you’re buying or selling in South West London
If you’re buying your first home:
- Saving in a Lifetime ISA (you can open one between the ages of 18 and 39) now costs you less if your home ends up over £450,000.
- Your First Home won’t open until 2027. If a new build appeals, start looking at which developments sign up.
- Speak to a mortgage adviser before you plan around a scheme. The details matter.
If you’re selling a flat or a first home:
- From 2027, some first-time buyers will be steered towards new builds, where the 20% loan is available. If you’re selling the kind of home a first-time buyer would usually go for, you may be up against developer incentives.
- That makes pricing, presentation and a clear plan more important, not less. Canada’s lesson is that most buyers still buy without a scheme, but the scheme can shape where they look.
The takeaway
Canada’s experience shows that the headline matters less than the small print. Help that matches real prices and is simple to use gets taken up. Help with tight caps and complicated strings gets ignored.
Your First Home is more generous than Canada’s version, and higher London limits give it a fighting chance here. Whether it works in South West London will come down to how many developers sign up and what the final rules say. We’ll keep an eye on it.
If you’re thinking about buying or selling and want to talk it through, get in touch. We reply the same day.
Adam & Melissa
This article is general information, not financial or mortgage advice. Budget details may change when the full rules are published.