The final tranche of Help-to-Buy equity loan repayments — for purchases made in 2020 and 2021 — has now passed its first interest-charge milestone. Help-to-Buy closed fully to new applications on 1 May 2026. Over its 12-year run, the scheme funded 380,000 home purchases worth £103 billion, with the Government taking equity stakes in those properties. What replaces it is not one scheme but three, each with very different trade-offs that first-time buyers in May 2026 are still trying to compare.
What actually replaces Help-to-Buy
Three schemes are now the route for first-time buyers in England without deposits:
1. The Mortgage Guarantee Scheme — extended to 2027
The MGS lets lenders offer 95% LTV mortgages with the Government guaranteeing the top 15% of the loan against default. From the buyer's view, this looks like a normal 5% deposit mortgage. Rates in May 2026: 4.85% on a 2-year fix from Lloyds, 4.79% from Nationwide for first-time buyers. Notably higher than a 60% LTV at 3.95%, but you don't need to scrape together 40% of a £280,000 house.
2. Shared Ownership — substantial 2025/26 expansion
Shared Ownership now allows starting stakes from 10% (was 25%), with rent on the unowned portion capped at 2.75% of unowned equity. Staircasing to 100% is now allowed in 5% increments without revaluation — a significant procedural improvement over the old scheme. Roughly 47,000 Shared Ownership transactions are forecast for 2026/27 according to Homes England, up from 32,000 in 2024/25.
3. First Homes — relaunched in 27 areas
The First Homes scheme provides a 30% discount on new-build prices for first-time buyers below local salary thresholds. After a slow start in 2022-2024, it has now been relaunched in 27 priority areas including parts of Cumbria, Cornwall, the East Midlands and South Wales. A First Home in Lancaster at full price £215,000 is sold to a qualifying buyer at £150,500. The discount is permanent — it transfers to the next first-time buyer when you sell.
The borrowing trap nobody mentions
Shared Ownership has a quiet feature that is becoming a major issue in May 2026: the rent on the unowned share is index-linked, not fixed. Most leases use RPI + 0.5% annually. With RPI running at 3.9% in April 2026, that means rent on the unowned share rises by 4.4% this year — compounding. Over 10 years, the rent on the unowned half of a Shared Ownership flat purchased in 2024 has risen 38% in real terms. The mortgage payment stays roughly flat (if on a 5-year fix), but rent eats into household budgets in a way Help-to-Buy never did. About 6% of Shared Ownership households are now technically in housing-cost stress (>50% of net income on combined mortgage and rent).
The Mortgage Guarantee Scheme's hidden cost
MGS mortgages carry a roughly 0.7-0.9% rate premium over standard 95% LTV deals — the lender prices in the residual default risk above the guarantee. Over 25 years on a £266,000 mortgage, this is around £36,000 in additional interest. That's the "deposit gap\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\" you're paying for, in slow instalments.
What first-time buyers should actually do in May 2026
- If you have a 10% deposit or more: skip MGS and Shared Ownership entirely. Go to a 90% LTV mortgage at 4.45% (best buy in May from First Direct or HSBC). The rate gap is meaningful over 25 years.
- If you have a 5% deposit and want a freehold home: MGS is the right product. Get the 5-year fix at 4.79% if you plan to stay 7+ years; the 2-year fix is fine if you plan to move/refinance.
- If you have a 5% deposit but want a city flat where freehold isn't practical: Shared Ownership is the right tool, but ONLY if you can afford to staircase to at least 75% within 7 years. Otherwise the index-linked rent will overtake you.
- If you qualify under local salary thresholds for First Homes: this is the clear winner. The 30% permanent discount with no equity loan to repay and no Government stake is the best deal in the UK first-time buyer market right now.
The complexity isn't accidental. Help-to-Buy was popular precisely because it was simple: 20% equity loan, 5% deposit, 75% mortgage. Its replacements offer better economics for some buyer profiles and worse for others — and the choice now depends on your local market, your income, your timeline, and details that didn't matter in the old system. First-time buyers without independent mortgage advice in May 2026 are making decisions they don't understand.