Industry voices remain unconvinced that the first-time buyer loans introduced in Budget 2026 will be enough to boost housebuilding
Key measures affecting housebuilding from today’s Budget:
£1.5 billion in additional affordable housing funding
Biodiversity Net Gain (BNG)exemptions for residential brownfield sites of up to 1.5 ha.
A freeze on major changes to building regulations
£4.7 billion first-time buyer equity loan scheme
VAT relief for social housing land transactions
Chancellor John Healey’s first Budget offered support for housebuilding and first-time buyers, but has it done enough to address the viability concerns in housebuilding and regeneration? Industry experts remain unconvinced. While some welcome the additional affordable homes funding and help for first-time buyers, several questioned whether it goes far enough in tackling development costs and wider viability challenges.
Olivia Harris, chief executive, Dolphin Living, said:
“This Budget brings some positive news for those looking to get onto the housing ladder, especially with the confirmation of the income caps for Your First Home. Less so for renters, and despite the same affordability constraints existing for renters the household income cap for them has not yet been raised. There exists a real need to offer some hope to those unable to access social housing, or afford to rent on the open market, by aligning the income caps for discount market rent to the new cap for Your First Home and ensuring that some of the extra funding for the Social and Affordable Homes Programme is directed towards delivering more discount to market rented homes, especially within London.”
Mary-Anne Bowring, managing director, Ringley Group, said:
“Your First Home is a welcome initiative that should help some first-time buyers overcome the deposit barrier, while providing a much-needed boost to new-build sales. But supporting demand is only part of the equation. It does little to address the underlying viability pressures that are restricting the delivery of new homes.
“This is particularly evident in Build to Rent, where starts on site have fallen by 79% over the past year. Institutional investment has become an important source of new housing supply, yet rising development costs and policy uncertainty are making it increasingly difficult to bring schemes forward.
“If the Government is serious about increasing housing delivery, it needs to look beyond helping people buy homes and address the economics of building them. Without action on development viability and investor confidence, the risk is that we stimulate demand without delivering the additional housing supply the country needs.”
Vanessa Hale, chief executive of Real Estate UK:
“This Budget fell short of what’s needed to address the viability crisis blocking the renewal of cities and towns, which has seen property development largely cease in much of the UK. The economic and social consequences of this cannot be overstated, with town centres emptying, new homes not being built, defence facilities delayed, regional office buildings standing empty and logistics and industrial capacity wearing out. It needs urgent and bold intervention and sadly this Budget did not deliver. While we support the positive measures around accessibility to homeownership, increased funding for affordable housing, accelerating devolution where real estate has an integral role to play, and the qualified ban on new building regulations, these gains are rapidly being offset by other regulatory burdens, additional taxes, and rising construction and operational costs, all of which the Government needs to urgently address over the coming months.”
Adam Daniels, Chief Executive, Vistry Group, said:
“We want to build homes and help people onto the housing ladder so are encouraged by the content in the Budget which brings much needed and welcome support for first-time buyers. Likewise, we welcome the additional funding to deliver more affordable homes, especially for councils and registered providers, and the introduction of a new VAT relief on land sold to registered social housing providers to expedite the construction of social housing. However, we would caution that the delivery of the Government’s wider housing agenda remains at risk unless the housing development viability challenge is urgently addressed. This must include reducing regulatory burdens, bearing down on construction costs, and backing innovation such as advanced modular manufacturing of new homes.”
Linz Darlington, MD of leasehold extension experts, Homehold, said:
"Healey discussed the Your First Home loan scheme for first-time buyers which sounds promising but risks repeating the same flaws of the Help to Buy scheme if it channels taxpayer support into new-build developments without enough safeguards on price. The National Audit Office found that Help to Buy boosted the profits of the biggest housebuilders and let buyers borrow more. Income and price caps are a step forward, but a cap limits what a buyer can purchase; it doesn't stop developers pricing up to it, so the Government needs to be wary of that.
“They also announced the First-time Buyer ISA, which could provide support of £20,000 per homeowner when they come to buy a home.
"To really help the next generation of homeowners, the Government needed to ensure that support isn't swallowed up by inflated developer margins.
"When it comes to current leaseholders, they are still in limbo, waiting on more announcements to be made for changes to be introduced. There was also no mention of leasehold reform in the budget, suggesting that new homes bought could continue to be weighed down by the continued leasehold problems the Government has promised to fix.
"Without these promises, a new home bought using Government support risks becoming a trapdoor rather than genuine long-term investments."
Andrew Lloyd, managing director at property data firm, Search Acumen, said:
“The Office of Budget Responsibility said building 1.5 million homes was one of the biggest pro-growth measures the government could do and that is highly unlikely to be reached. To be really pro-growth, we need more to support planning and reduce the regulatory burdens impacting developers. Whilst Your First Home may help boost demand, it does not solve the supply constraint caused by labour shortages and a glut of red tape. The Chancellor's announcement to support entrepreneurs, back British businesses, and build on the already announced Job Plans are all commendable steps to help revive industry; however they arguably do not go far enough for housebuilding.”
Michael Norris, a director in the transactions team at Fieldfisher noted that now that the Budget has confirmed details of the First Home Scheme, residential developers could begin assessing how the scheme could affect individual sites and sales strategies:
“Your First Home is now a defined and funded programme rather than a policy announcement awaiting its principal terms. The lower deposit requirement could reduce one of the barriers facing first-time buyers, while the equity loan will reduce the proportion of the purchase price that must be funded through a repayment mortgage.
For developers, however, the commercial outcome will depend on how the confirmed elements operate together at site level. Income limits, local price caps, mortgage affordability and participation fees will all affect the number of qualifying purchasers and homes.
The scheme could also influence the sales and tenure mix on some developments by supporting additional individual open-market purchases. Its effect cannot yet be predicted and will vary between sites and local markets.
However, demand-side intervention is only part of the housing-delivery picture. Additional buyer demand will still need to be matched by a sufficient pipeline of viable and deliverable homes and sites.”
Suzanne Benson, national head of real estate at Trowers & Hamlins believes that the combination of changes is largely moving in the right direction:
“The variety of targeted housing measures in the Budget indicates Government is taking a broader view of affordable housing than perhaps initially indicated.
An additional interesting reference to a new VAT relief to expedite land transfer to registered providers also has the potential to speed up delivery. When combined with the increase in the income caps for accessing shared ownership announced this week and the New Homes product, [this] demonstrates a clear appetite to stimulate supply and support a range of housing needs.”
Stuart Tym, planning partner at Merali Beedle was generally supportive of changes to BNG:
“In my view BNG, was introduced too fast without proper consideration of the best process by which to engage with it. Brownfield sites are often plagued by heavy ‘abnormal’ costs, including land decontamination, demolition, and infrastructure overhauls. Adding BNG costs can make essential housing schemes financially unviable; exempting these sites directly supports the government's ambition to build well-connected housing on previously developed urban land when leaving them within the BNG requirement gave little real gain.”