‘Missed the mark’: Industry reaction to Budget rolls in

Chancellor John Healey’s Budget “missed the mark,” according to FORTO Finance director and mortgage adviser Anthony Curtis – and he wasn’t alone among the mortgage industry in criticising the announcement.

Healey’s first Autumn Budget left much of the mortgage and property industry wanting more: frustrated by the absence of stamp duty reform, alarmed by further landlord tax increases, and cautiously hopeful — but sceptical — about the Your First Home scheme designed to replace Help to Buy.

Healey entered the Commons against a difficult backdrop of elevated borrowing costs and subdued growth. Some measures had already been confirmed ahead of the statement — including the removal of VAT on domestic electricity bills, scrapping the gas standing charge, the restoration of the £2 bus fare cap, and a 20% business rates cut for pubs, clubs and live music venues from April 2027 — but the industry’s eyes were firmly on what the Budget would do for housing.

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Your First Home: welcome relief or a repeat of past mistakes?

The centrepiece housing announcement — the Your First Home equity loan scheme, designed to replace Help to Buy — drew the widest and most divided response from industry commentators. There was broad agreement that something needed to be done for first-time buyers, but significant scepticism about whether this scheme does enough, or the right things, to make a lasting difference.

Commenting on the launch of the Your First Home scheme, Eric Leenders, managing director of personal finance at UK Finance, said the organisation welcomed the scheme. “A deposit can be one of the biggest barriers to home ownership for first-time buyers, especially while also managing everyday living costs and private rents,” he said.

“Addressing the hurdle should help more people to take their first step onto the housing ladder, while supporting the delivery of much-needed new homes. UK Finance and its members will be working closely with government to ensure the scheme works effectively for buyers, lenders and the wider housing market.”

John Doughty, managing director of Just Mortgages, was also among the more measured supporters: “We welcome further details on Your First Home and the news of £4.7bn in government-backed lending, with a sensible approach to both income and property price caps.

“It’s important that such a scheme recognises that the challenges facing FTBs aren’t limited to those on lower incomes, while property caps reflect the significant differences in housing costs across the country — particularly in the capital where the original Help to Buy scheme was so welcome. Keeping the interest-free period to five years like Help to Buy is also encouraging, giving buyers some certainty over costs in those early years, while lining up with the typical mortgage fixed-rate period.”

James Chutter, head of new build partnerships at The Mortgage Brain, echoed the cautious optimism: “The announcement comes at a tricky time for first-time buyers, many of whom continue to face significant barriers to homeownership, particularly when it comes to raising a deposit without financial support from the ‘Bank of Mum and Dad’. The proposed income caps appear sensible, helping to target support at those who need it most. The scheme has the potential to give aspiring homeowners the confidence to take their first step onto the property ladder.”

Verona Frankish, CEO of Yopa, struck a similar tone: “Today’s announcement will be welcome news for thousands of aspiring first-time buyers who have spent years saving hard, making sacrifices and watching homeownership move further out of reach. A smaller deposit requirement and five years of interest-free support could make a genuine difference.”

But she was quick to add a warning: “We must be careful not to repeat the mistakes of the past. Without sufficient housing supply, additional purchasing power risks pushing prices higher and leaving buyers vulnerable to negative equity.”

This concern was shared sharply by Curtis, who was one of the scheme’s critics: “Your First Home, which aims to help young people get on the property ladder, won’t work half as well as the Chancellor imagines. The people who use it will leave themselves at a high risk of falling into negative equity. Mortgage professionals know what dangerous territory that is to be in.”

The timing of the scheme also drew fire. Jeremy Leaf, north London estate agent and former residential chairman of the Royal Institution of Chartered Surveyors (RICS), pointed out the practical problem created by the spring launch date: “It won’t be introduced until the spring yet already we have would-be first-time buyers delaying their plans to buy a home until the scheme is available. Why would you buy now if you think you can save money later?”

Mark Harris, chief executive of mortgage broker SPF Private Clients, agreed: “We welcome the formal announcement of Your First Home, although it is a shame it is not being launched until the spring as such delays are not helpful to anyone. It also feels like a missed opportunity that it wasn’t extended to all buyers and existing homes as well as first-time buyers and new builds, which would really have given the housing market a boost.”

Housing supply and housebuilding: funding without delivery?

Running through almost every commentary was a deeper concern: that without meaningful action on planning, development viability and land supply, any demand-side support will ultimately fall short.

The Budget did include an additional £1.5bn for social and affordable housing and proposed changes to brownfield development; but experts were underwhelmed.

Felicity Barnett, new build and affordable housing partnerships manager at The Mortgage Brain, went to the heart of the delivery problem: “What was missing in today’s Budget was support for the people who have to build these homes. It’s more expensive than ever to build, which is why so many sites are weighted towards larger three-, four-, and five-bed homes to make the land viable.

“If we want more homes suited to first time buyers, planning and local authorities need to work with housebuilders, as changing the mix on a site can send it straight back into planning. With planning approvals down 8% in Q1, there was a real opportunity today to speed things up, and it hasn’t been taken.”

Andy Morrison, director of UK Property Development, acknowledged the investment while questioning its sufficiency: “The additional £1.5bn for social and affordable housing is a welcome commitment, but the real test will be whether it translates into homes on the ground.

“Funding is only one part of the equation, and developers continue to face considerable challenges around planning delays, construction costs and the financial viability of bringing new sites forward. The proposed changes to brownfield development are a positive step, but the Government must go further in removing the obstacles that prevent housebuilding at scale.”

Adam Morris, founder of LandSale, focused on an often-overlooked precondition: “The Government must recognise that every new home starts with a suitable plot of land. There’s little point committing billions to housebuilding if developers continue to struggle to access viable sites, navigate the planning system, and bring land forward for development. Removing barriers to development will be just as important as the funding announced today.”

For Curtis, the problem was already visible in the behaviour of major developers: “Developers are ramping down their building in the south of England. It’s too expensive to build. While the government has brought back Help to Buy, there need to be new homes to buy. At this point, Your First Home is just Sturm und Drang, with no real action to stimulate the property industry.”

Leaf put it simply: “There is no point throwing money at something without a plan to deliver it. What about red tape, planning, boots on the ground? We are interested not in housing starts but in completions. You can’t live in a start.”

Landlord taxation: squeezing the sector that provides the homes

If the Your First Home scheme was the Budget’s most debated measure, the decision to further increase income tax on property income was its most controversial. The Chancellor raised the rate by an additional 2 percentage points — doubling the increase from last year’s Budget — taking the basic rate for property income to 24%, the higher rate to 44%, and the additional rate to 49% from April 2027.

Rob Stanton, sales and distribution director at Landbay, set out the numbers plainly: “Having already announced a 2% increase in income tax on property income in last year’s Budget, the Government has now doubled that increase to 4%, which will take the basic rate to 24%, the higher rate to 44% and the additional rate to 49% from April 2027. This clearly represents a significant additional tax burden at a time when landlords are already managing higher mortgage costs, growing regulatory responsibilities and the expense of maintaining their properties.”

He added that Landbay’s own research, published that morning, confirmed concerns ahead of the Budget. He said: “Almost 80% of landlords were concerned about further tax changes ahead of the Budget, and today’s announcement suggests those concerns were well founded.”

The downstream consequences for tenants were a recurring theme. Stanton warned: “When the costs of providing rental housing increase, there is a real likelihood that some of those costs will eventually be passed on to tenants through higher rents. Further taxation is likely to make some landlords reconsider purchasing additional properties, while others may decide to sell existing investments. At a time when we need to encourage investment and ensure there are sufficient rental homes to meet demand, measures which risk reducing supply could ultimately make life even more difficult for tenants.”

Marc von Grundherr, director of Benham and Reeves, was blunt in his criticism: “Landlords have been kicked while they’re down once again, with the Chancellor delivering yet another blow to buy-to-let profitability. The Government cannot continue to squeeze landlords financially while expecting them to provide the homes the nation so desperately needs. If investment in the sector becomes increasingly unattractive, more landlords will inevitably reconsider their position, further reducing rental stock and placing additional upward pressure on rents for tenants.”

Leaf reinforced the point from an estate agency perspective: “There was nothing to encourage new landlords into the buy-to-let sector or anything to persuade others to stay invested. There is an urgent need to stem the flow of those leaving the sector or rents will keep rising and standards will keep declining.”

Amy Reynolds, head of sales at Antony Roberts, noted the knock-on effect on first-time buyers themselves: “Easing the tax burden on landlords would help tenants too. More rental homes mean less pressure on rents, which are so high at the moment that tenants can’t save for a deposit.”

Duncan Kreeger, CEO of TAB, tied this theme to a broader critique of the Budget’s direction: “The extent of red tape in buy to let is stupefying and since the general election, it’s only got worse. John Healey needs to loosen the paralysing grip of over-regulation. We’re out here lending the money to help property investors but there are huge opportunities to accelerate growth via deregulation of the sector further.”

Stamp duty: the reform that never came

Of all the things the Budget did not do, the absence of any stamp duty reform generated the most frustration among property professionals. The view across the board was that this was a significant missed opportunity — one with real costs to market activity, economic mobility and government revenue.

Rachel Geddes, strategic lender relationship director at The Mortgage Brain, was direct: “It was disappointing not to see any movement on Stamp Duty in today’s Budget. We’re not talking about a few hundred pounds saving with this type of reform — it can mean thousands, if not tens of thousands. Advisers have informed us that clients are holding off not just from deciding to buy, but from completing, until after the Budget. Alongside weaker consumer confidence more generally, that’s been one factor in the softer activity we’ve seen over the last month.”

Curtis made the economic case for a targeted reform that the Chancellor chose not to pursue: “He should have made downsizers — buyers over 55 moving to a cheaper main home — exempt from stamp duty. It wouldn’t have cost that much and it would have triggered a chain of further sales, each of which would have paid stamp duty.

“The cut would have helped a moribund property market and would have paid for itself via all the extra transactions. And it would have freed up large homes for families to buy. Given we aren’t building our way out of the housing crisis any time soon, expanding the supply of available bedrooms sounds like a pretty smart move.”

Harris echoed the call for reform: “We would have liked to have seen widespread reform of stamp duty, which wasn’t touched upon. We hope the Government addresses this in the not-too-distant future as this is a significant deterrent to people moving home, both those moving up the ladder as well as those downsizing.”

Reynolds drew out the structural effect on the market: “At the moment, the biggest cost of buying one extra bedroom is often the tax itself, so people are staying where they are. If you cut stamp duty for main residences, especially for downsizers, homes would come back onto the market for families, and people could move for jobs. That would do more for growth than squeezing the same homeowners again.”

The broader picture, as Reynolds observed, is a Chancellor relying on frozen thresholds to do quiet fiscal work rather than making headline-grabbing changes: “The Chancellor is relying on frozen thresholds doing the work quietly. That avoids headlines, but it doesn’t give buyers any reason to feel confident. The market isn’t looking for generosity, just a clear direction, so that people can plan a move with some certainty for a year or two.”

Banking tax and business rates: two sides of the tax coin

The Budget’s tax measures on the banking sector and on business rates represent two very different policy directions — one adding pressure, one providing relief — and the property and lending industry has views on both.

The bank levy increase was a concern for lenders who fear it could translate into tighter credit conditions. Harris took some comfort in its scale: “The bank levy has been increased but not by as much as expected. This is encouraging as there were fears that this would have a knock-on effect on borrowing and savings rates. At a time when mortgage costs have significantly increased and borrowers are experiencing major rate shocks when they come to remortgage, it would not have been prudent to hike bank taxes significantly.”

Kreeger was less concerned personally, but alive to the systemic implications: “The tax raid on bank profits is interesting. It will put more pressure on the banks’ appetite for specialist property lending. With banks under further pressure, property investors and small businesses are set to feel lending tighten.”

He saw an opportunity in this for alternative lenders: “In a tighter climate for the banks, borrowers need speed and certainty.”

On business rates, the reaction was more uniformly positive. The abolition of business rates for qualifying high-street businesses was welcomed as a meaningful and well-targeted measure. Kreeger was unequivocal: “One thing that thousands of high-street shops, cafés, pubs and hairdressers will no longer have to pay business rates. That will help rejuvenate our high streets and I support it wholeheartedly.”

On the question of mortgage rates following the Budget, Geddes offered a clear note of caution: “Swap rates can react quickly to Budget announcements, but lenders will typically take time to digest the detail and market movements before repricing, so borrowers shouldn’t expect a wave of rate changes overnight. Geopolitical events have had a far bigger impact on mortgage pricing than anything in the Budget, because of how mortgage funding is created in the UK and our heavy reliance on overseas stability.”

Joshua Elash, founding director of specialist lender MT Finance, said: “As predicted, this was a calm, constructive Budget. The headline measures to support home ownership, including the First-Time Buyer ISA and the Your First Home Equity Scheme, provide first-time buyers with a clearer route onto the property ladder. They also offer a welcome boost for developers and give businesses the certainty needed to plan.

“Together, these measures create a strong foundation for growth in 2027, and specialist finance will have an important role to play in helping the market build on that momentum.”