United Kingdom budget to support first-time homebuyers

In England, first-time buyers could soon be able to purchase newly built homes with a deposit of just 2.5 percent, as the UK Government prepares to set out a new housing support scheme in its Autumn Budget.

By Kate Sreenarong, in News, Housing · 29 Oct 2026, 20:03 · 0 Comments

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On Wednesday, 28 October, Chancellor John Healey presented the budget to Parliament, with measures aimed at easing household financial pressures, supporting small businesses, and encouraging economic growth.

As reported by Reuters, the Government is seeking to provide targeted relief to those facing higher living costs while maintaining control over public borrowing, as rising energy prices, fuelled by the conflict involving Iran, have put pressure on household budgets.

Accessible homeownership

The Government has already announced plans for “Your First Home”, an equity loan scheme designed to help people who are struggling to save enough for a property deposit.

Under the proposed scheme, eligible first-time buyers in England would be able to purchase a new-build home with a deposit of 2.5 percent, supported by a government-backed equity loan worth 20 percent of the property’s value.

This loan would have an initial interest-free period, potentially reducing monthly payments compared with a mortgage covering 95 percent of the purchase price.

The initiative aims to help people who cannot rely on family financial assistance get onto the property ladder, while also supporting the new-build housing market, with participating developers expected to contribute to the scheme’s costs.

Eligibility will be subject to household income limits and property price caps that vary by location.

Further details, including the launch date and full conditions, are expected in the budget announcement.

This scheme has drawn comparisons with the former “Help to Buy” programme, which used government equity loans to support purchases of newly built properties.

Savings account

The Government is also preparing a new First Time Buyer Individual Savings Account (ISA) to help prospective homeowners save for a deposit.

In June, the Treasury launched a consultation on the account, seeking views on how it should operate. The consultation closed in August, and the Government is reviewing responses ahead of implementation.

This new account will replace the Lifetime ISA for people saving for their first property, which currently lets eligible savers receive a government bonus on qualifying contributions, subject to specific rules and withdrawal conditions.

The final arrangements for the replacement account, including its bonus structure and eligibility requirements, will determine how it compares with existing savings options.

Energy bills

Housing measures are expected to help tackle the cost of living, as households face uncertainty over energy prices and borrowing costs.

According to Reuters, the budget is expected to include targeted support for lower-income households affected by rising energy bills, alongside measures intended to encourage investment and protect economic growth.

Building societies have warned that reducing the amount people can save in tax-free Cash ISAs could limit deposits available to lenders, potentially affecting the cost and availability of home loans.

Therefore, the proposed reduction in the annual Cash ISA allowance, from £20,000 to £12,000, has become a point of debate ahead of the budget.

Local authorities

The budget is also expected to advance the Government’s decentralisation agenda, moving more funding and decision-making power from Westminster to regional authorities.

Prime Minister Andy Burnham has presented greater local control as part of the Government’s strategy for encouraging economic growth across the country.

These plans include giving local leaders a greater role in directing investment, with changes to how some tax revenues are retained and spent at regional level.

The Government has also announced plans to transfer £1 billion in research and development funding to local leaders over four years.

Responsibilities and implementation timetables are expected to vary between regions, depending on their existing powers and administrative arrangements.

The Autumn Budget will set out the Government’s economic and fiscal priorities for the coming year.

For prospective homebuyers, the immediate focus will be on the final details of Your First Home, including who qualifies, how the equity loan will work and when applications can begin.