Your First Home scheme raises questions for housebuilders in England over costs, caps and demand
Published on 5 November 2026
The equity loan scheme aims to boost home ownership and housing delivery, but fees pose risk to housebuilder margins
At a glance
The first-time buyer support aims to stimulate demand, but the extent of government funding may constrain its impact.
Higher-than-expected participation fees threaten to potentially squeeze development margins, although tiered rates offer some relief for smaller housebuilders.
Housing developers should assess participation terms site by site to protect viability once further details are published.
The Your First Home scheme, which was confirmed in the Autumn Budget 2026, will help eligible first-time buyers purchase newbuild homes on participating developments in England. Buyers will need a minimum 2.5% deposit and receive a 20% government equity loan, which will be interest-free for five years.
Eligibility will subject to caps on property purchase price and household income, mortgage availability and use as the buyer's main home. These criteria are intended to target financial support at buyers who would otherwise struggle to afford a larger deposit, but they also narrow the pool of eligible buyers available to housebuilders. Housebuilders will need to assess pricing on a site-by-site basis, particularly where differences in price caps between neighbouring local authority areas could distort local prices.
Sales timing and risk
Customer pre-registration and initial developer registration for the scheme are expected by the end of this year. Applications are due to open from February 2027, with first completions from April 2027.
Ahead of those first expected completions in April next year, developers should expect some buyers to initiate delays to ensure they can take advantage of the scheme or to request concessions to complete before starts of the scheme. This could put further pressure on already stretched sites.
Housing supply constraints
The housebuilding industry has long called for government action to stimulate market demand. The previous Help to Buy scheme ended in 2023. Smaller deposits and lower mortgage borrowing could help some buyers, but there is concern the scheme may not make ownership affordable for enough households to materially increase sales.
Government funding of £4.7 billion over five years may also limit the scheme’s potential reach. The Office for Budget Responsibility (OBR) expects only "a marginal impact on housing supply given its limited overall size" and wider economic and regulatory conditions. It downgraded supply forecasts for 2026-27 and 2027-28 also underline the challenge of delivering the government’s 1.5 million homes ambition.
Improving affordability and stimulating buyer demand will not, on their own, resolve the housing viability crisis. Housebuilders are still faced with high build costs, planning constraints and regulatory burdens. For several years, high interest rates and weak demand have eroded viability, while subdued house price growth has limited developers' ability to absorb rising input costs.
The building safety levy, the Building Safety Regulator regime, biodiversity net gain, nutrient mitigation requirements, residential property developer tax and higher corporation tax rates add further cost and complexity to residential development. The OBR now considers their impact on housebuilding to be greater than previously expected. The chancellor's commitment to make no further changes to building control during this parliament unless required for building safety, will at least offer some limited comfort to the industry.
Participation fees and margins
Unlike predecessor schemes, Your First Home charges developers a participation fee based on the final sale price to contribute to running costs. Annual rates will rise incrementally with sales volumes, with developers paying 1% on the first 100 scheme sales, 3% on sales 101 to 250 and 4% above 250.
The tiers are designed to support small and medium-sized developers, but fees are materially higher than the market expected. This risks eroding margins or necessitating price increases, potentially weakening the affordability benefit and making price caps harder to accommodate, reducing the appeal of participation for housebuilders.
Buyer risks
A smaller deposit lowers the entry barrier, but leaves buyers with less initial equity in their homes and increases their exposure to falling prices. Interest becomes payable after five years and repayment is linked the home's value rather than the sum originally borrowed, so that a 20% equity loan normally will require repayment of 20% of the home’s independently assessed value.
Buyers share in falling values but repay more if prices rise potentially affecting the scheme’s appeal. Lender underwriting criteria may further restrict eligibility. While developers will not carry the credit risk, buyer affordability problems could create reputational and conduct risks. Scheme marketing also raises consumer protection and financial promotions compliance considerations for sales teams.
Outstanding details
Full details of the scheme are yet to be published. Developers assessment of participation will depend on clarity in several areas. These include participation agreement terms, including warranties, indemnities, reporting obligations, audit rights and termination provisions.
The methodology for fee calculation is also outstanding, including measurement periods, treatment of group entities, treatment of reservations versus completions, and anti-avoidance rules.
Further detail is also awaited on the treatment of price and funding caps over time, including whether these will be indexed or otherwise reviewed.
The mechanics for buyers arrangements also remain unclarified. These include lender participation, minimum repayments, valuations, fees and remortgage arrangements. The government promises full repayment guidance before applications open.
Osborne Clarke view
The Your First Home scheme offers welcome support, but its funding limits and participation fees could potentially constrain the opportunity to boost housing demand at the first-time buyer end of the market. For housebuilders, the question is whether additional sales will justify the cost of participation on each site.
The scheme alone will not resolve the sector’s viability pressures. The balance between fees, likely sales gains, local price caps and existing costs will become clearer for housebuilders when the full terms emerge and they can revisit and model those assumptions. Success will depend on generating additional sales without undermining margins or affordability.
