Prime Minister Andy Burnham has been praised over his 'Your First Home' programme for first-time buyers, with the scheme described as 'significant' by industry figures. The Labour Party Prime Minister's initiative could increase the number of houses British builder Bellway produces each year by 10%, its boss has said.
Jason Honeyman, who has led Bellway since 2017, said while the scheme has the potential to 'provide significant support for first-time buyers', it could weigh on the market in the near term. Speaking about the programme, Honeyman said: 'Based upon our past experience with help to buy, the new scheme has the potential to boost volumes by around 10%, and with a market recovery, provide a path back to at least 10,000 homes a year and a return on equity of 15%.'
Bellway's current targets and market pressures
Bellway is targeting between 9,000 and 9,400 homes in the current year, down from 9,695 last year. This reduction is attributed to a lower order book and 'ongoing pressures on customer demand', coupled with higher construction costs running at between 3% and 4%.
The 'Your First Home' scheme is expected to support 2.5% deposits, backed by 20% government-backed equity loans, for prospective first-time buyers purchasing a new-build property from a developer signed up to the scheme. People will be able to access equity loans with an initial interest free period, meaning that those who use the scheme could save hundreds of pounds per month compared to a 95% mortgage.
Broker analysis of the equity loan structure
Nicholas Mendes, of the broker John Charcol, explained the financial mechanics of the scheme: 'Because the equity loan covers 20%, the mortgage itself sits at 77.5% loan-to-value, which gives buyers access to lower rates than they would typically see on a 95% mortgage.'
This structure is designed to make new-build homes more accessible to first-time buyers, who often struggle to save for a large deposit. The initial interest-free period on the equity loans provides additional short-term relief for those entering the property market.
Vistry Group's separate profit warning
Separately, Vistry Group, one of Britain's biggest housebuilders, has cut its annual profit expectations after half-year losses ballooned as it grappled with a £600m pile of unsold homes. Vistry blamed 'disappointing summer sales of private homes' and withdrawals or renegotiation of deals to build affordable homes.
The contrasting fortunes of Bellway and Vistry highlight the mixed conditions in the UK housing market. While the 'Your First Home' scheme is seen as a potential boost for sales volumes, broader market pressures including high construction costs and weak demand continue to weigh on the sector. The impact of the scheme on first-time buyers and housebuilders alike will become clearer as it is rolled out across the country.
