Budget 2026 series

Budget 2026 29 October 2026

Markets · Housebuilders

UK Budget 2026: Your First Home Gives the Housebuilders a Hand, Not a Lift

The Chancellor has confirmed a £4.7 billion equity loan scheme for around 70,000 first-time buyers and £1.5 billion more for social and affordable housing.

Mickey Perry29 October 2026Equity & Markets Insight

A difficult backdrop

The housebuilding market has been a difficult one of late. We have seen higher mortgage rates, subdued buyer confidence, lacklustre house prices and pressure on developers’ margins.

Yesterday the Chancellor, John Healey, came up with some support for the housebuilding industry. This was expected and pre-announced, but it was still good to get the clarification.

The government is providing a £4.7 billion equity loan programme, designed to help approximately 70,000 first-time buyers purchase their house.

How the scheme will work

The Your First Home programme will provide buyers with a government equity loan of up to 20% of the purchase price of their first house.

Buyers will be required to provide a deposit of at least 2.5%, and the government loan will be interest-free for the first five years. From year six the loan carries interest at 1.5%, rising to 3% from year seven, and it is repaid as 20% of the home’s value when the home is sold.

There are household income limits of £110,000 outside London and £140,000 within London, and property price ceilings of £650,000 in inner London and £500,000 for outer London. Elsewhere the caps are set from local median prices, and the full list by local authority is still to be published.

Source: MHCLG, Your First Home guidance, 28 October 2026; HM Treasury, Budget 2026 policy costings.

The scheme will substantially reduce the mortgage requirement for an eligible buyer compared with not having a scheme at all. On a hypothetical £300,000 property, a 2.5% deposit is £7,500, a 20% government equity loan covers £60,000, and the mortgage required falls to £232,500.

Applications open in February 2027, and it is expected that the first loans will be issued from April.

What might be achieved?

The Treasury estimates that the scheme may assist 70,000 households to purchase their first home and support the delivery of approximately 20,000 additional properties.

There is a difference between supporting 70,000 buyers and creating 70,000 additional homes. Some of those receiving support would have bought anyway, later or on different terms, so government support can bring purchases forward without increasing the total number of homes sold over an extended period. The 20,000 figure is the one that matters for investors, and it will be spread over several years.

New homes completed in the UK, and the 20,000 the scheme adds

Permanent new-build dwellings completed, UK, calendar years 2023 to 2025, thousands, against the Treasury’s estimate of additional homes from Your First Home over the life of the scheme

UK completionsYour First Home, additional homes (total, all years)

Completions have fallen in each of the last three years, from 194,520 in 2023 to 170,840 in 2025. The Office for Budget Responsibility now expects UK net additions of around 220,000 a year in both 2026–27 and 2027–28, rising to around 260,000 by 2030–31, which is 190,000 fewer homes over the forecast period than it expected in March. Against that, 20,000 additional homes over the five years of the scheme is around 4,000 a year, or under 2% of annual supply. Even if every one of them arrived in a single year, it would add around 9% to that year’s total. The Office for Budget Responsibility itself expects the scheme to have only a marginal impact on housing supply, given its limited overall size.

Which companies benefit the most?

Persimmon, Taylor Wimpey, Vistry, Bellway and Barratt Redrow are among the more obvious companies to have a look into on the back of this assistance. They have significant exposure to mainstream new-build housing, where first-time buyer affordability influences reservation rates and sales completions.

Source: company full-year results announcements (RNS): Persimmon 10 March 2026, Vistry 4 March 2026, Taylor Wimpey 5 March 2026, Berkeley 24 June 2026, Barratt Redrow 16 September 2026, Bellway 13 October 2026. Vistry’s blended price reflects 74% partner-funded completions; Taylor Wimpey UK excluding joint ventures; Barratt Redrow wholly owned, excluding joint ventures.

Persimmon, with a blended average selling price of £278,203 and no significant presence in London, sits most squarely inside the scheme’s price caps. First-time buyers were already 36% of its private completions in the first half of 2026.

Berkeley Group has a greater exposure to higher-value homes and London developments, and therefore may not experience the same level of uplift or positive reaction as a result. Some of its properties may qualify, but with an average selling price of £546,000 its sales mix is not that of a mainstream regional developer.

Developers are expected to contribute towards the scheme’s costs. The fee is 1% on the first 100 homes a developer sells through the scheme each year, 3% on the next 150 and 4% above that, so a builder selling 500 homes a year through it pays an average of around 3.1%. The precise terms matter, because higher sales volumes do not necessarily produce higher profits if margins are reduced.

Other opportunities

Alongside the Your First Home programme, the government has also committed an additional £1.5 billion for social and affordable housing, intended to support approximately 10,000 new homes. The funding is to be prioritised for social rent, especially council homes, and takes the Social and Affordable Homes Programme to more than £40 billion over ten years.

This may be particularly relevant for Vistry, which is specifically niched towards partnership and affordable housing. Partner-funded homes were 74% of its 15,658 completions last year.

The impact

I see it as positive. I think the market will probably see this as quite positive for the direction that the government, and future governments, are prepared to take: that assistance is required for deposits for new house buyers.

I do, however, feel that this won’t really affect too much. The level is too low, at a time when we have concerns about rising interest rates and weak sentiment in the UK.

This can be a little bit lacking for the housebuilders. I’m not sure it will move their figures.

The market reached the same conclusion within hours. Housebuilders rose while the Chancellor was speaking, then sold off as the Budget was digested: Taylor Wimpey closed down -7.3%, Persimmon -6.9% and Barratt Redrow -6.6%, and the sector index fell around -6%, its biggest one-day drop since January 2025.

That there is some support is positive. But ultimately, to my mind, they need much greater background support, and I don’t know that this needs to cost the government too much, because they are providing deposits in what is a pretty safe environment.

Charging zero interest for the first five years does, though, look like a costly thing for the government to be pursuing. I am not sure they should be offering interest-free options so much as providing the liquidity for the market to pick up. The right way to recover the cost is through the equity itself: because the loan is repaid as 20% of the home’s value, the government regains its share of any positive movement in the house price over the coming five years, and that is where the return should come from rather than from a subsidy on the interest.

Although this is a positive development, it doesn’t go far enough for the housebuilders. Liquidity is the bigger issue: people’s ability throughout the chain to afford the next step up, because of such high deposit requirements. It would be handy if the government could open up this area so that more people could purchase houses without the concern and onus of collecting monthly payments they cannot afford.

We live in a time where unemployment figures are not improving. Unemployment was 4.7% in the three months to August 2026, and the Office for Budget Responsibility expects it to average 5.0% this year and 5.1% in 2027 before it starts to fall.

Unemployment rate

LFS unemployment, aged 16 and over, rolling three-month rate, %, with the OBR’s annual-average forecasts for 2026 to 2028

Unemployment rate (ONS)OBR forecast, annual average

Consumer confidence is not particularly strong. The GfK index fell eleven points to -24 in October, its largest monthly fall since July 2016, and has been negative throughout the last three years.

Consumer confidence

GfK Consumer Confidence Barometer, UK overall index score, monthly, October 2023 to October 2026

Overall index score

House prices are stagnating. The UK average was £273,037 in August 2026, up just 0.9% on a year earlier, the fourth consecutive month in which annual growth has slowed.

UK house prices, month on month

UK House Price Index, average price, % change on previous month, September 2023 to August 2026

Monthly riseMonthly fall

Given these factors, and concerns about the overall economy, I don’t see that this scheme will ultimately positively affect the fundamental results of the housebuilders.