"Your First Home" equity loan scheme for first-time buyers

The Government has announced that it will launch a new "Your First Home" equity loan scheme for first-time buyers.

What do we know?

• First-time buyers in England will be able to buy a new-build home with a 2.5% deposit, and the Government will lend them a further 20% of the purchase price.
• The equity loans will start with an interest-free period. 
• The home must be bought from a developer taking part in the scheme.
• Developers will be expected to pay a contribution when they sign up. 
• Eligibility testing, such as property price and household income caps, will be introduced. 

What is unknown?

• The amount of contribution that developers will have to pay to join (and how much impact this will have on margins). However, indications are that it will be tied to property value. The Government will need to pitch the level correctly in order to ensure that SME builders with smaller balance sheets are able to access the scheme without being unfairly prejudiced (e.g. the Home Builders Federation had previously proposed a structured developer fee beginning at 1% of sales price rising over time based on the number of customers a builder has provided access to). 
• The date that the scheme will commence and its duration.
• What local price caps or household income caps will be. 

It is expected that this will all be set out in the Budget 2026. 

How has the market reacted?

• A number of UK housebuilders saw their shares rise by more than 10% on Monday 28 September 2026 in response to the announcement. 
• The UK housebuilders' index rose to 16% - the highest level since March 2026, albeit still half its pre-sell-off 2022 level.
• Shares in construction companies and building materials suppliers also rose. 
• Some critics have suggested that the new proposals may not work as effectively as the previous Help to Buy scheme as a result of the combined effect of SDLT requirements and elevated interest rates. 
• The Home Builders Federation has welcomed the proposals and has encouraged Government to move quickly to implement the new scheme. 

What impact might we see?

• The resulting uptick in new development and un-stalled existing development could drive more building contracts, the exercise of existing option and conditional contracts and supply agreements. 
• It is anticipated that smaller 2.5% buyer deposits will widen the pool of eligible purchasers, speeding up sales rates and cash flow return for developers. However, this may be tempered by local price and household income caps which could limit eligibility. It is also possible, depending on viability and a geographic pricing, that this may concentrate sales into lower-value properties. 
• Residential and mixed-use development projects may prove more attractive to debt lenders and development finance institutions if there is an increase in pre-sale volumes and greater certainty of Government-backed purchases. The Government’s press release states that “the scheme will also act as a much-needed stimulus to support the market and boost housing supply."
• The previous Help to Buy scheme supported 387,000 across a 10-year period. It is almost impossible to extrapolate the numbers to identify a likely delivery figure for the newly proposed scheme but it will undoubtedly directly contribute to the Government’s housebuilding target. 
• Although a welcome new policy, it is one element in the wider viability landscape which remains challenging (e.g. inflation remains high, new levies and building requirements have increased costs, delays with material supply remain).
• In due course, developers will need to review the Government participation agreement, update reservation agreements, standard sale contracts and sales documents and prepare plot-level legal packs.

What next?

• We will be tuning into the Budget on 28 October 2026 to ascertain and share the further policy detail. We expect this will be informed by the conclusions drawn in the recently published “Evaluation of the Help to Buy scheme: evaluation findings report.” 
• Evidence presented to the Ministry of Housing, Communities and Local Government in July 2026 suggested that Help to Buy inflated prices in some areas because it was not targeted, so we might expect a more nuanced approach to the new proposals (such as a local connection test to benefit those linked geographically or through work to an area). 

Please get in touch if you would like to discuss some of the issues raised, we regularly advise on land acquisition and sale, options, conditional contracts, development funding, and construction considerations.