The Government has announced a new equity loan scheme for England, named ‘Your First Home’ as part of its plans to “support more people into home ownership.”
With further details to be announced by the Chancellor at the Budget on 28th October, the initiative is expected to support 2.5% deposits, backed by 20% government-backed equity loans, for prospective first-time buyers purchasing a new-build property from a developer signed up to the scheme.
According to the Government announcement, people will be able to access equity loans with an initial interest free period, meaning that those who use the scheme could save hundreds of pounds per month compared to a 95% mortgage. Furthermore, the Your First Home scheme “will help tackle the deposit barrier for first-time buyers who would be unable to afford their first home otherwise, building on the government’s existing work to help more young people and families onto the housing ladder.”
Details to be clarified in the Budget include costs and implementation timelines in addition to a “household income cap with local property price caps to further ensure support is targeted at those who need it.” Similarly, “developers will be expected to make a contribution when signing up to the scheme to help cover costs,” with the government also noting that “with the new build housing market currently facing challenging headwinds driven by international economic pressures and rising construction costs, the scheme will also act as a much-needed stimulus to support the market and boost housing supply.”
Here, PBM presents a number of responses to the concept from across the sector:
Builders Merchants Federation (BMF)
The BMF noted that it has been campaigning for stimulus for the housebuilding market since the general election and said the scheme will provide a welcome boost for the building materials sector, where the fall in the number of new homes being built over the last four years has weighed heavily on demand. It added that “for some, however, the stimulus package has arrived too late (as) within the last 12 months, the BMF has seen 18 of its members go out of business, resulting in the loss of 1,197 jobs.”
The BMF notes it would be looking closely at the full details of the scheme, including impacts on Scotland and Wales, when specifics are announced by Chancellor John Healey in the Budget next month.
CEO John Newcomb said: “We are currently in a four-year decline which has been deep and long. We wait to hear about the exact details of this scheme, but it’s been clear that for too long house building has been stagnant, and help is needed to rebuild confidence.
“Construction is a vital element of the UK economy, and one that has a massive impact on the nation’s financial position.The BMF has pressed for a stimulant for first-time buyers to be introduced, and it’s good to see that the Government is finally listening.”
Furthermore, BMF manufacturing members are “poised to act on any signs of an uptick in housebuilding, having allocated nearly £1.2 billion up to 2029, to expand capacity and capability across factories, production lines, and new processes to produce the materials and products that would support the government’s housing ambitions.”
John Carter, CEO of STARK UK, commented on the Your First Home scheme and also referenced plans to bring 300,000 empty properties back into use. He said: “We’re delighted to see Andy Burnham and his Government taking this positive step to support new home buyers and to get building and construction back on its feet. It’s a real win for the industry, and for everyone who has backed our Let’s Get Britain Building NOW campaign.
“We have been calling for targeted support to help first-time buyers onto the ladder, and Government has listened. Your First Home will unlock demand, give housebuilders the confidence to bring forward new sites, and send a boost right through the supply chain, from skilled trades and merchants to manufacturers and local businesses.
“The plan to bring 300,000 empty properties back into use is just as welcome. Retrofitting empty homes returns them to the market quickly, supports affordable housing in local communities and creates steady work for local trades.
“Government now needs to set out the detail, and make sure these measures work for everyone, from national housebuilders, regional and SME firms and independent tradespeople. There must be a level playing field. Builders of every size have a vital role to play, and they need to work together to deliver the homes we so desperately need.
“This is the first brick, not the whole wall. Demand alone won’t build the homes Britain needs. Government must now match this ambition with a faster, more predictable planning system, sustained investment in skills, and VAT relief on materials and retrofitting across the board. We need both the sites and the people to deliver. Get those foundations in place and the UK’s housing targets become achievable, not aspirational.”
“This is the first brick, not the whole wall. Demand alone won’t build the homes Britain needs. Government must now match this ambition with a faster, more predictable planning system, sustained investment in skills, and VAT relief on materials and retrofitting across the board.”
National House Building Council (NHBC)
Responding to the announcement, NHBC CEO Paul Turner said: “News from Andy Burnham and Angela Rayner of a new equity loan scheme to help first-time buyers purchase new build homes is a welcome boost for the industry. The security of owning a high-quality, safe and sustainable home has for too long been out of reach for many hard-working people.
“It is reassuring that Government has recognised this with material support that will help get people on the first rung of the housing ladder.”
He continued: “But there is no one single solution to the housing challenge. Supply must also be addressed through accelerated planning reform and the easing of unnecessary regulatory burdens. What’s more it’s vital to keep focus on maintaining quality in the construction of new homes.”
Home Builders Federation (HBF)
Neil Jefferson, Chief Executive, commented: “We welcome the Government’s announcement today and its recognition of the significant challenges facing first-time buyers and the wider housing market. We have been calling for action to improve access to home ownership, and a well-designed scheme has the potential to make a real difference to households who are struggling to get onto the housing ladder.
“It is important now that the Government moves quickly to implement the scheme. We look forward to working constructively with Government and the wider sector to help refine the detail and ensure the scheme is as effective as possible. It is important that it works for buyers across different parts of the country and for housebuilders of all sizes, while supporting the Government’s wider ambition to increase housing delivery.
“The housebuilding industry is ready to play its part, delivering new homes and jobs at pace, with increased investment, and we will continue to work closely with Government to help get the scheme up and running as quickly as possible.”
MD Allan Wright said: “Helping first-time buyers get their first foot on the property ladder has always been a crucial step in creating demand in the wider market and thereby driving confidence throughout the new build sector. Therefore, the announcement of Your First Home must absolutely be applauded, but, as always, the devil will be in the detail, so we’ll be looking closely at what’s announced in the Budget next month with much interest.
“Helping first-time buyers access new-build homes can give developers greater certainty to commit to a sustained housebuilding pipeline which, in turn, is positive news for merchants and manufacturers alike, allowing all to plan better, invest in stock and collaborate closely to ensure that materials are available where and when they’re needed. Crucial to the success of this scheme will be how quickly a policy announcement translates into tangible activity on the ground, and we will also be seeking clarity on how this scheme fits alongside the wider housing targets that the Labour Government has been promoting since its election victory over two years ago.
“For now, let’s view the announcement with optimism that, if it succeeds in giving both buyers and housebuilders greater confidence, there should be a positive knock-on effect right through the construction supply chain. I’ll eagerly await the Budget on 28 October.”
“Crucial to the success of this scheme will be how quickly a policy announcement translates into tangible activity on the ground, and we will also be seeking clarity on how this scheme fits alongside the wider housing targets that the Labour Government has been promoting since its election victory over two years ago.”
This is a developing story and we will add more responses from the industry as they are made public.
