Opinion

Your
First
Home

What could the new equity-loan scheme mean for England's residential market?

By Emma Burke

Managing Director, Head of Development Finance Origination (UK & Europe)

The scheme

A planned return to equity-loan support for first-time buyers

The Government has announced plans for Your First Home, a new equity-loan scheme for first-time buyers in England. Expected to be confirmed at the October Budget, it represents a planned return to a Help to Buy-style intervention in the new-build housing market.

Under the outline plans, eligible first-time buyers purchasing a new-build home from a participating developer are expected to be able to do so with a 2.5% deposit, supported by a 20% government-backed equity loan, with an initial interest-free period.

The scheme will also include a household income cap and local property price caps. Developers will be expected to make a financial contribution when signing up to the scheme to help cover its costs, although the level and structure of that contribution have yet to be confirmed.

2 | Your First Home

How a purchase could be funded

2.5%: Deposit from the first-time buyer
20%: Government-backed equity loan, with an initial interest-free period
77.5%: Mortgage

Illustrative split for a new-build home from a participating developer, based on the outline plans.

The detailed eligibility thresholds, developer contribution, repayment terms, costs and implementation timetable are expected to be set out at the October Budget.

So, what could it mean for the market?

From a developer's perspective, the attraction is clear.

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The developer's view

One of the biggest constraints facing many developers today is not necessarily a lack of underlying demand for housing, but buyer affordability.

Reducing the upfront deposit requirement could increase the pool of potential purchasers. For developers, that could mean:

Stronger reservation rates
Faster sales
Greater certainty around forward sales
Less completed stock held for sale
Improved cash conversion
Potentially greater confidence to commence new schemes

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Sales velocity

Sales velocity is fundamental to development viability.

Faster sales can shorten the period for which debt remains outstanding, reduce finance costs and improve a development's overall risk profile.

The Government's recent evaluation of the previous Help to Buy scheme found evidence that it improved access to home ownership and increased housing supply.

15%

of new homes built in England between 2013 and 2023 were attributable to Help to Buy, the evaluation estimated.

Each square represents 1% of new homes built over the period.

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The supply question

But there is another side to the equation.

Will the scheme result in more homes being built, or simply create more demand for the homes already available? If supply responds, the policy could help unlock stalled schemes, support new starts and increase housing delivery.

If supply does not respond sufficiently, some of the additional purchasing power created by the scheme could instead be reflected in higher new-build prices. While that may support sales values and developer confidence, it would not necessarily improve affordability for the end purchaser.

The Help to Buy evaluation found evidence consistent with this, including an estimated increase in property prices, particularly in areas where affordability was already more constrained. It also found that a significant proportion of participants said they could have purchased without the scheme.

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This is the key tension

Helping more people access a mortgage and deposit does not necessarily make housing more affordable if the underlying price of the home increases.

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The cost of participation

There is another variable that will be particularly important from a developer and lender perspective: the cost of participation.

Developers are expected to contribute financially to the new scheme, but we do not yet know whether that will be a fixed contribution, a per-unit cost, a percentage of sales or another mechanism.

That detail matters.

A modest contribution may be readily absorbed within a viable scheme. A more significant cost could affect developer margins, land values and ultimately the viability of marginal sites. For developers, lenders and investors, the interaction between sales rates, pricing, margins, construction costs and the cost of participating in the scheme could therefore be just as important as the headline 2.5% deposit.

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The wider market

For the wider English residential market, I see three central considerations.

The potential benefit

More first-time buyers could access home ownership, potentially giving developers greater confidence to build.

The potential risk

Additional purchasing power could support higher new-build prices where supply remains constrained.

The critical test

Whether the policy genuinely increases housing supply at the price points and in the types of homes that first-time buyers can afford.

That final point is key.

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Measuring success

As a development lender, I don't think the success of this policy should be measured solely by how many buyers use it. It should be measured by whether it helps turn demand into additional housing supply.

The October Budget, particularly the detail around eligibility, property price caps, developer contributions, repayment terms and implementation, will therefore be critical. If structured correctly, Your First Home could provide meaningful demand-side support to a market that has been under pressure.

But the real opportunity is not simply to help more people buy the new homes already available.

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The real opportunity

It is to give developers the confidence to build the homes that are still needed.

Emma Burke

Managing Director,
Head of Development Finance
Origination (UK & Europe)

Maslow Capital

One Lender. Bridging, Development and Bespoke Lending Solutions.

Founded in 2009, Maslow Capital is a pan-European specialist real estate finance provider with operations across eight European markets. With full discretion over its funds under management, Maslow has financed real estate projects with a combined value of c.£11.8bn across c.730 transactions. Maslow provides Bridging, Development Finance and bespoke Lending Solutions across a broad range of real estate asset classes, with facilities ranging from £300k to £750m.