First thing to say is that it appears the concerted lobbying has paid off and well done to Matt Pennycook, the Housing Minister and others for finally getting some first-time buyer support across the line. Having the consistency at the top helps because even if the argument has taken time to land, it may never have landed at all if we’d had a new Housing Minister after Burnham took charge.
It’s also promising that clarity and consistency of message from the sector has got through. The Government is willing to listen when the argument is well made.
First-time buyers in England will be able to buy a new-build home with a 2.5% deposit and a 20% interest-free equity loan, from developers signed up to the scheme. There will be a household income cap and local property price caps. The scheme is funded by reprioritising existing budgets, developers pay a fee related to property values, and pre-registration opens by the end of 2026.
That is the whole of it so far. What has not been said is the budget envelope, the annual volume of sales it is sized to support, the level of the income cap, how the local price caps are set, the length of the interest-free period, the developer fee scale, and whether London gets a larger loan. The quantum matters more than any of the other gaps. Help to Buy accounted for around one in seven new homes built in England over its lifetime.
Why it is welcome
Three reasons, and they are good ones.
First, capacity. Planning reform generates consents. Consents become homes only if there are contractors, site teams and supply chains left to build them out. That capacity atrophies quietly and returns slowly if starts plummet as they have been. However much this government wants council housing, it needs the private sector firing to see any return on the planning reforms it has already made, and without an intervention of some kind on the demand side, it risked permanently losing capability in the sector and its supply chains.
Second, the politics are unusually clean. Public First’s research with the HBF found 69% public support for a scheme lowering the deposit to 5% on new builds, rising to 74% among those who voted Labour in 2024 and would now vote elsewhere. That group also reports the strongest sense that the situation is unacceptable, at 84% against 76% of the public. The public reads falling first-time buyer numbers as national decline and as younger generations having been let down. One focus group participant put the political calculation better than any polling table: “they get me a house, I’ll shine their shoes.”
There is a warning inside that research. Help to Buy was popular but never attached to the party that created it: 46% thought the Conservatives introduced it, 37% were unsure, and younger voters tended to think it was Labour’s. This government will have to work to own Your First Home if it wants the political return.
Third, the timing. Equity stakes bought into a soft market rather than a rising one invert the usual criticism. Help to Buy launched into an upswing and was accused of fuelling it. This launches into depressed values.
The Help to Buy loan book is healthy : 40% of loans repaid by March 2024 at an average uplift of around 9%, or £718m on original loan values. Will this scheme have the same results – not so sure given market conditions.
Generous on the deposit, cautious on the constraint that binds
The government has gone further than the industry asked on deposit and stopped short of what the modelling assumed on loan size. Both matter, and they pull in opposite directions.
Public First for instance proposed a 5% deposit. Your First Home halves it to 2.5%. That is a striking number and it makes for a good announcement. But the same research is explicit that deposit is not the binding constraint for most people: of non-owners aged 20 to 44, only 17% have a high enough income to borrow what they would need. Borrowing power is what locks people out, and borrowing power moves with the size of the equity loan, not the size of the deposit.
This is where the headline figures now circulating need care. The 490,000 additional buyers and 98,500 additional homes over five years come from a modelled scheme of 20% outside London and 40% in London. The regional split in that modelling is stark: at 20% in London, an additional 29,000 Londoners come into reach; at 40%, it is 91,000, an increase of over 200% on the baseline. A flat 20% scheme does not produce the headline numbers, and it produces least where the problem is worst. In London, just 4.9% of non-owning 20 to 44 year olds can currently buy at all.
There is also a question the Budget will have to settle for lenders. A 2.5% deposit with a 20% loan is a 77.5% mortgage, not the 75% Help to Buy generally produced. Whether lenders treat the equity loan as equity or as a second charge, and whether they price the product at a genuine low-LTV rate, determines how much of the modelled monthly saving is real.
The stock this scheme is designed to buy has been leaving the pipeline
Since Help to Buy ended, builders have pivoted hard towards larger homes for families and upsizers to offset viability pressure. Zoopla’s analysis of new-home listings outside city centres shows one-bed flats falling from around 12% of listings in 2022 to 6% in 2025, two-bed flats from about 14% to 8%, while four-bed houses rose from around 26% to 32%. Close to seven in ten new homes listed outside city centres are now three- and four-bed houses.
Set against the resale market the gap is sharper still: two-bed houses are 18% of resale listings against 11% of new build, and four-beds are 32% of new build against 19% of resale. New supply has moved away from the entry-level formats, and away from what the second-hand market is actually transacting.
So a new-build-only scheme with price caps set around modest sized homes arrives after three years in which these entry type homes have been leaving the pipeline. There is a danger the caps bind and the scheme finds limited eligible stock across large parts of the country.
Velocity is not viability
Faster sales rates recycle equity into the next site and take some working capital risk out of the appraisal. On flatted schemes with slow absorption, that is genuinely material: it shortens the sales period, de-risks the back end and improves the discount rate you would apply to a long build-out.
But none of that moves cost per unit. It does not touch build cost inflation, second staircases, gateway delays, or the tariff stack. A scheme that does not stack on residual land value does not begin to stack because the units sell more quickly.
So Your First Home is a sales-rate intervention and a good one but not necessarily a viability solver.
Four things to watch on 28 October:
- The envelope. How much money, and how many sales a year it is sized to support. This is the difference between one in seven new homes and a rounding error.
- London. A flat 20% or a larger loan in the capital. Without an uplift, the modelled benefit largely does not arrive in the market with the worst problem.
- The developer fee scale. Public First specified a graduated fee — 1% on the first 50 homes a year, rising to 4% above 1,000 — explicitly so SMEs could participate. Whether the Budget adopts that scale is the cleanest test of whether this is an SME-accessible scheme or a volume-builder scheme. Help to Buy concentrated heavily: seventeen developers did over 1,000 transactions each.
- How the caps are set, and whether they bite on open market and also discount market sale homes.
Welcome, then. The right instrument, at a defensible moment, with a fiscal treatment that makes it affordable — the equity loan should score as a financial asset rather than straight debt under the revised debt measure, which is why it can be done in a tight Budget.
