The British government plans to introduce a new housing program called "Your First Home" intended to assist first-time buyers in England with purchasing new-build properties. The scheme is expected to allow eligible participants to purchase a home with a 2.5% deposit, supported by a 20% government-backed equity loan. Further details regarding the initiative are scheduled to be announced during the Budget on October 28, 2026.
This program follows a period of reduced activity in the housing sector. Anthony Codling, an analyst at RBC Capital Markets, stated that housebuilders faced lower demand and higher construction costs over the past year due to conflict in the Middle East and increased mortgage rates. According to Propertymark, a trade body for estate agents, first-time buyers represented between 18% and 32% of sales at its member branches during the first eight months of 2026.
Analysis conducted by estate agency Hamptons for The Independent shows that the average new-build home in England currently costs £386,900. Under the proposed 2.5% deposit requirement, a buyer at this price point would need £9,673 upfront. However, Hamptons analyst Isaac Odegbami noted that when including estimated stamp duty and conveyancing fees, the total initial cost would rise to approximately £15,952.
The program specifically targets first-time buyers in England who may be prepared for mortgage payments but lack significant savings for a traditional deposit. While the government has not yet released the specific number of people who will be eligible, the scheme is intended for those buying new-build homes from participating developers. The scale of the required upfront investment varies significantly by geography; Hamptons reported the lowest potential deposit in Liverpool at £3,950, while the highest would be in Kensington & Chelsea at £27,320.
For a household purchasing an average-priced new-build home, the monthly mortgage payment is estimated at approximately £1,498, based on a 2.5% deposit, a 20% government equity loan, and current average interest rates. Buyers will notice a shift in the barrier to entry, as the 2.5% requirement is lower than standard market deposits. The government intends to implement household income caps and local property price caps to target support.
The program also functions as a potential stimulus for the construction industry, which has seen lower sales and profit margins recently. The long-term impact on participants will depend on several factors that are currently not reported, including the length of the interest-free period for the government loan and the interest rates applied once that period ends. The Chancellor is expected to clarify these terms, along with developer participation costs, during the Budget announcement on October 28.