The government’s proposed first-time buyer scheme risks falling short unless the Chancellor tackles the wider problems holding back housebuilding, property industry leaders have warned.
The Your First Home initiative is expected to help eligible buyers purchase new-build properties with deposits as low as 2.5%.
However, developers and agents are demanding clarity over eligibility, price caps, repayment arrangements and the costs housebuilders will face.
Tim Foreman, managing director of Land and New Homes at LRG, believes the scheme could help developers commit to new projects.
However, he warned that uncertainty over its operation could have the opposite effect.
Developers need certainty
Foreman said the government must publish the scheme’s full terms, including eligibility, local price limits, repayment arrangements and launch dates.
He also wants smaller housebuilders to have access to the scheme without facing disproportionate costs.
Participating developers are expected to contribute towards the initiative.
Consequently, industry figures are concerned that additional financial obligations could undermine development viability.
Andy Morrison, director of UK Property Development, said: “While the proposed first-time buyer scheme may help stimulate demand for new-build homes, the real test will be whether it improves the commercial viability of bringing additional housing stock to market.”
He warned that developers already face rising construction costs, planning delays and infrastructure requirements.
“Without that balance, stimulating demand alone will do little to address the underlying shortage of homes,” he added.
Warning over house price inflation
Verona Frankish, CEO of Yopa, questioned whether another buyer incentive could increase house prices without delivering sufficient new housing.
“Years of initiatives designed to stimulate demand have helped push house prices further beyond the reach of aspiring homeowners,” she said.
“A smaller deposit requirement may provide a welcome short-term boost, but unless we’re building enough suitable and affordable homes, we risk inflating prices further and leaving buyers financially stretched.”
Foreman also pointed to lessons from Help to Buy.
A 2019 National Audit Office review found that 31% of buyers surveyed said they could have purchased a property they wanted without the scheme.
He argues that future support should focus on buyers who genuinely need assistance and help generate additional construction.
London price caps under scrutiny
Marcus Dixon, UK head of living and residential research at JLL, said local price and income thresholds must reflect regional housing markets.
He warned that caps set too low in London could exclude households the scheme is intended to help.
JLL also wants greater certainty over affordable housing funding, development finance and planning regulation.
Meanwhile, Foreman has called for wider action on stamp duty, building safety and the viability of apartment developments.
For estate agents and housebuilders, the key question is whether Your First Home will generate additional transactions and construction or simply shift demand towards eligible properties.
The Budget is expected to provide more detail on how the scheme will operate and when buyers can use it.
