The reaction to the government’s Your First Home scheme has been decidedly lukewarm. Having initially welcomed the prospect of a successor to Help to Buy, housebuilders and investors were underwhelmed by the details eventually revealed in last week’s Budget. The FTSE 350 Home Construction Index fell more than 6% (its worst one-day drop since January 2025) while the scheme received mixed but largely critical media coverage.
It’s not difficult to see why. Your First Home will not open for applications until February 2027, with the first sales expected from April. Its £4.7 billion funding pot over five years is expected to help around 70,000 households, while participating developers will also have to pay a progressive fee on homes sold through the scheme.
Given that Help to Buy supported 387,000 purchases between 2013 and 2023, with no levy for developers to pay, less restrictive property price caps and no income caps, this was not quite the demand-side stimulus some had hoped for.
But judging Your First Home purely by the boost it provides to the major housebuilders potentially misses the point. Of course, anything that encourages delivery of new homes would be welcome, but look at the scheme from the perspective of first-time buyers and communities across the Midlands, and there is a case that the scheme’s limitations could also be some of its strengths.
The government is walking a difficult tightrope. It wants to make home ownership more achievable, increase demand for new homes and support housing delivery. But it also has limited public money to do so and needs to avoid some of the criticisms levelled at the scheme’s predecessor, Help to Buy.
A more targeted approach
An official report from the National Audit Office suggests that almost two-thirds of those who used Help to Buy could have bought a home without it. Some have therefore questioned the extent to which taxpayers’ money ultimately benefited developers and investors, while critics have argued that, by creating additional demand, the scheme contributed to higher prices, partially undermining the support it provided.
Your First Home looks like a much more targeted intervention, with the potential to be particularly valuable to those struggling to buy a home without access to the ‘bank of mum and dad’: a report from Savills suggests 52% of first-time buyers receive family assistance.
Under the new scheme, eligible first-time buyers will need a deposit of just 2.5%, supplemented by a 20% government equity loan and a mortgage for the remainder. The equity loan will be interest-free for five years. Household income will be capped at £110,000 outside London, while the home itself must fall beneath a locally determined price cap. The government says these limits are intended to focus support on more modest homes and published examples already range substantially, from £355,000 in Manchester to £220,000 in Middlesbrough, although the government has not yet published the complete list of local authority caps.
Local consideration
This local approach is refreshing. Too often, debates about housing affordability are defined by the experience of London and the South East and then applied nationally. Yet the situation facing a young person trying to get on the property ladder in Birmingham, Wolverhampton, Coventry or Stoke may be considerably different.
Recognising that the country is made up of multiple communities, each with their own economies and housing markets, rather than simply being divided into ‘London’ and ‘everywhere else’, is a positive step towards a national housing policy that flexes according to local circumstances.
It also feels consistent with a broader shift towards place-based policymaking. If we accept that local leaders are better placed to understand skills, transport, investment and economic development in their areas, it makes sense to recognise that housing markets differ too.
In the Midlands, the housing challenge is not simply one of high house prices; in many communities, homes are considerably cheaper than other parts of the country, but household incomes are also lower on average, so accumulating the deposit and securing an affordable mortgage can still present significant barriers.
In Birmingham, for example, the average price paid by a first-time buyer was £213,000 in August. On a property at that price, a conventional 95% mortgage would require a deposit of around £10,650 and a mortgage of £202,350. Under Your First Home, the minimum 2.5% deposit would fall to just £5,325, while a 20% government equity loan of £42,600 would reduce the mortgage required to around £165,075. For someone struggling to get onto the housing ladder, halving the immediate deposit requirement and substantially reducing the mortgage they need could move home ownership from unaffordable to affordable. And the fact that the scheme’s criteria limit its application reduces the risk of it pushing prices upwards, cancelling out the benefits it offers.
An opportunity for smaller housebuilders
There is another feature that could be particularly relevant to the Midlands.
Participating developers will pay a fee on transactions through Your First Home, but this operates progressively. The fee will be 1% for the first 100 homes a developer sells through the scheme in a year, increasing to 3% for homes 101 to 250 and 4% beyond 250.
In principle, that gives smaller developers a lower marginal burden than the largest-volume participants in the scheme.
With conditions already challenging for SME housebuilders, this could be a welcome boost. Research reported by the Home Builders Federation found that 91% of SME respondents believed the separate Building Safety Levy would make developments financially unviable, while 36% said it had already caused them to delay, redesign or cancel schemes.
Centre for the New Midlands has itself previously highlighted the pressures of rising labour, materials and regulatory costs on smaller builders. A recent Centre article cited Home Builders Federation calculations suggesting that the average cost of developing a new home has risen by £76,000 over six years.
Your First Home clearly will not solve those problems but it may contribute to strengthened demand for modest new homes while imposing a proportionately lower participation fee on developers selling relatively small numbers through the scheme.
Ensuring continued delivery of social and affordable homes
There is a danger in asking any single home-ownership scheme to do too much. Increased private demand is good news if it unlocks stalled sites and supports additional development, but it is less obviously beneficial if developers respond by changing the tenure mix of homes they were already going to build.
Faced with a more difficult housing market, many developers have pivoted to bulk sales to registered providers, accepting lower margins in return for greater certainty and, in the process, supporting the delivery of a higher proportion of social and affordable homes.
An intervention matching the scale of Help to Buy might risk housebuilders refocusing on private sales, reducing the volume of social and affordable homes being built. Whether Your First Home actually changes tenure mix will need to be watched as the scheme becomes operational, but this is less likely given the limited scale of the scheme.
Small doesn’t necessarily mean insignificant
Your First Home is not going to transform the Midlands housing market on its own. Nor will it solve the much bigger challenge of building enough homes of every tenure.
But the government is attempting something difficult: helping first-time buyers without creating an indiscriminate demand stimulus; supporting housebuilding while limiting the cost to taxpayers; and operating a national programme that acknowledges different local housing markets.
There will inevitably be trade-offs: a scheme big enough to excite the country’s largest housebuilders may also be big enough to recreate some of the criticisms made of Help to Buy. A scheme targeted tightly enough to avoid those criticisms will have a more modest impact.
For the Midlands, the test should therefore not be whether Your First Home sends housebuilder share prices soaring; it should be whether it helps people who currently find home ownership beyond their reach, supports viable development by builders of different sizes and contributes to sustainable housing growth in the communities that need it.
If it manages that, a scheme received as something of a damp squib might look rather more significant to the communities it helps.
This is a personal blog post. Any opinions, findings, and conclusion or recommendations expressed in this article are those of the authors and do not necessarily reflect the view of the Centre for the New Midlands or any of our associated organisations/individuals.
ABOUT OUR AUTHOR:
Henry Columbine is MD, Strategy & Corporate Communications at global corporate affairs firm SEC Newgate. He has more than 18 years’ experience in strategic communications with a focus on the property sector and heads up SEC Newgate’s Midlands office as well as leading the company’s activity across the UK regions.
Working primarily with real estate developers, investment firms and consultants, he advises on strategic communications, stakeholder engagement and corporate positioning. His work has helped clients navigate and communicate around key policy and regulatory themes including planning reform, building safety legislation, rental reform, decarbonisation requirements, business rates and wider regulatory change.
Henry regularly contributes to sector thought leadership, is a long-standing judge at Property Week’s RESI Awards and contributed to ‘Promoting Property’, published by Routledge in 2020.
Born and raised in Walsall and now based in the Midlands, Henry has a BA in Modern Languages (French and German) from Durham University and has lived and worked in London, France, Austria and Guadeloupe. He brings particular interest in how housing, planning and decarbonisation policy translate into real‑world delivery and community outcomes across the Midlands.
