"The government’s renewed focus on planning reform and urban regeneration is welcome, as is the commitment to ‘bulldoze through’ barriers to delivery. But bricks and mortar are only half the equation."
- Tim Foreman - LRG
If the government is serious about hitting its ambitious target of delivering 1.5 million new homes over this Parliament, then it must get serious about helping people to buy them.
One year into the current government, despite bold talk on planning reform and a £39 billion boost for affordable housing, the biggest hole in current housing policy remains the glaring absence of any significant government initiative to support first-time buyers.
Without first-time buyers, chains grind to a halt, housing delivery stalls, market confidence dips and developers - private and housing association alike - question the business case for starting new schemes. First-time buyers, with little support from the government, are struggling more than ever to get on the property ladder, and the impact of this on the market cannot be overstated.
Housing targets are meaningless without demand
The government’s renewed focus on planning reform and urban regeneration is welcome, as is the commitment to ‘bulldoze through’ barriers to delivery. But bricks and mortar are only half the equation. Planning consents do not build homes, and completed homes do not sell without a buyer.
The market only functions when there is sustained demand across the chain. That demand starts with first-time buyers.
Stamp Duty, affordability and the missing incentive
Interest rates, mortgage regulation and the end of Help to Buy have already made buying harder. But the recent Stamp Duty changes were particularly ill-timed. The reduction in the nil-rate band from £425,000 to £300,000 has added up to £6,250 to the cost of a first home, with no offsetting support.
The timing is especially unfortunate given that mortgage affordability remains the biggest barrier to ownership. According to the Building Societies Association, repayments now consume 22% of income - up 30% since the financial crisis. In this context, the lack of a government-backed scheme such as Help to Buy is a significant oversight, particularly given that the government has shown very little interest in shared ownership.
Variety sells
Developers know that the most successful sites are those that attract a range of purchasers - not just the wealthiest or most vulnerable, but the broad middle, which includes couples, young families, second-steppers and downsizers.
Currently, government housing policy is skewed towards student housing for rent. The £39 billion commitment to the Social and Affordable Homes Programme is significant, but with 60% of funding allocated to social rent, only 40% of the 300,000 homes it will fund over ten years will be for sale. That equates to just 12,000 homes per year. For context, first-time buyers accounted for over 173,000 purchases in 2024 (Halifax figures).
Critically, the government must do more to ensure that affordable homes for sale – usually in the form of shared ownership - meet the needs of aspiring first-time buyers.
Shared ownership deserves serious attention
This is all the more important because shared ownership is quietly doing some of the heavy lifting in the absence of Help to Buy. Its appeal is growing, particularly among those unable to save the large deposits now required under mainstream mortgage criteria. But while shared ownership is popular, it is poorly understood, under-promoted and falls short of meeting demand.
Mortgage lending shake-up is welcome
Mortgage regulation introduced in 2014, particularly on high loan-to-income ratios, had unintended consequences. In the highest-demand areas - London and the South East - first-time buyer numbers dropped by over 10% in some boroughs [ONS figures]. In these locations, the house price-to-income ratio can exceed 13, compared to 8 in more affordable areas.
It was encouraging that June’s Spending Review confirmed that the Mortgage Guarantee Scheme, which helps buyers with 5% deposits secure a home, will become permanent. Launched in 2021, the scheme incentivises lenders to offer 95% mortgages by guaranteeing the portion between 85% and 95%, reducing their risk. So far, the scheme has backed 53,000 mortgages, 86% of them to first-time buyers. However, critics argue it doesn’t address core issues, specifically affordability.
First-time buyers are key to volume delivery. Analysis by Public First shows only 10.4% of 20–44-year-olds in England can currently afford a home. In London, that figure drops to just 4.9%. The average age of an unassisted first-time buyer is now 32.5. The lucky 52% who receive help from the so-called Bank of Mum and Dad are getting average contributions of £55,000. For those without family wealth, the ladder is increasingly out of reach.
Although Help to Buy was not perfect, it was effective: around 85% of users were first-time buyers, according to HBF figures, and it drove up delivery, de-risked sites, and, crucially, gave mainstream housebuilders the confidence to invest. A targeted, better-designed successor scheme could do the same again.
This divide is not just socially divisive - it is economically counterproductive. Developers will not build 1.5 million homes unless they can see demand, and currently, the pool of first-time buyers is shrinking. The market is frozen at the bottom, and that has implications all the way up the chain.
If ministers are serious about ‘restoring the dream of home ownership’ as Sir Keir Starmer has promised, then a demand-side initiative must be a priority. The government has taken some steps in the right direction, but it has some way to go. A modernised Help to Buy-style scheme is exactly what the market needs. It would cost less than past iterations, support moderate-income households, and crucially, act as a catalyst for new housing delivery.
Without it, the market risks stalling just as the government is asking it to gear up. First-time buyers are the impetus that will fuel housing growth. Without that fuel, the housing market cannot move forward.
