TAB's CEO Duncan Kreeger argues the government's new equity loan scheme papers over the cracks – what the UK really needs is planning reform
Your First Home, the scheme that will attempt to bridge the gap between what it costs developers to build a home and what first-time buyers can afford, seems to have the backing of the wider mortgage industry. I don't think it deserves it.
The housebuilder's argument for the scheme – that they cannot build what they cannot sell and that many first-timers cannot afford to pay the prices developers need to earn the returns their shareholders expect – fails to address the bigger picture.
I don't blame Burnham for trying this. After all, the past three years are the first since the sixties that first-time buyers haven't had a leg-up from the government as they try to get on the property ladder.
That's the problem though. Instead of treating the injury itself, we've spent decades covering up an axe wound with a sticking plaster.
The cost of building a house, both in terms of materials and red tape, has jumped in recent years. Research from the Home Builders Federation shows that regulation and inflation have added £76,000 to the cost of a new home since 2020.
Lest that look like scaremongering, Rob Perrins, the executive chair of Berkeley Group recently told The Times that, since 2016, new regulations, taxes and levies have added £150,000 to the cost of delivering a typical two-bed flat in London. This figure excludes material and labour cost inflation and reflects only the additional regulatory burden. Meanwhile, London's new housing starts have fallen from 33,800 in 2015 to just 10,000 in 2026.
It would be far better to remove the barriers to building more, cheaper homes, than drumming up artificial demand for homes that are actually too expensive to build.
There's another problem with ducking root-and-branch reform via Your First Home.
Compared to clearing out regulations and restrictions, a new Help to Buy will make only marginal difference given housebuilding is so far below the government's target. Savills' latest research forecasts new home completions in England will fall to just 152,000 in 2026-27, roughly half the government's target and the lowest figure since 2015. Indeed, the number of new homes being built is now so low that the Office for Budget Responsibility could downgrade its predictions, which would impair growth forecasts and the Treasury's fiscal headroom.
In his first big speech as chancellor, John Healey pledged to cut through the "sludge" of government red tape and slow decision-making that holds back growth. He was right to. We shouldn't be papering over the cracks; we need supply-side reforms. We should be undertaking a full-scale review of the cumulative regulatory burden on the house-building sector.
We can see how effective this could be in the forthcoming changes to England's planning system – changes will take effect on 31 October. The reforms are designed to make it quicker and easier to make a planning application (including extensions, loft conversions and conservatories) by removing the involvement of councillor-led planning committees. Instead, all applications will be decided by council planning officers. The new process is expected to streamline applications, leading to quicker decisions. While the reforms are modest (they don't mean applications for extensions or conservatories will automatically be allowed and they will still be judged against national and local policy), they are set to drive an increase in building work.
Let's lean into this. We need the freedom to use brownfield sites in town centres without cost, impediment or delay. Stop making affordable housing compulsory on new-build developments – that would boost small builders, contractors and developers who lack the muscle to battle through regulations.
Sorting out the planning system would also support other forms of building – such as warehouses, industrial units and the commercial property needed to underpin economic growth. The same layers of regulation, delays and uncertainty that make building places to live so expensive also wreck the delivery of places where people manufacture, trade and store goods. This problem runs throughout our whole economy.
Empathy for young people struggling to buy their first home is understandable. But if the government wants to make homes genuinely more affordable, it needs to tackle why they cost so much to build them in the first place.
Your First Home may help some first-time buyers. It may also help some housebuilders sell homes that would otherwise sit beyond the reach of their target market. But that's not the same as fixing the housing crisis.
We have spent decades trying to make an undersupplied housing market work by pulling demand-side levers and subsidies. It's time to grab the nettle and tackle the supply problem.
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