The government has revived Help to Buy, but under a different guise.
Andy Burnham has used the start of Labour's conference to unveil "Your First Home", a 20% equity loan, initially interest-free, for first-time buyers in England without the bank of mum and dad.
Deposits drop to 2.5%, it's new builds only, and developers will pay a fee linked to the property value to help fund it. On a typical £230,000 first home, that's a £5,750 deposit and a loan of up to £46,000. Full details won't arrive until the Budget on 28 October, so the market has the weekend to digest the headline before Monday's open.
The timing isn't an accident. The Sunday Times reports in the same edition that planning approvals just hit a 13yr low: roughly 215,000 homes in the year to June. That's down 8%, and only 58% of the 370,000 the government says it needs. Buyers aren't turning up, so builders are slowing down, sticking to land they've already bought and squeezing as much juice out of the lemon as they can.
In response, the government has done what it does best... Hand homebuyers a sugar rush when what the market really needs is bitter medicine: faster planning, lighter taxes, less bureaucracy and a path to lower building costs.
The deadweight problem
The original scheme backed over 387,000 purchases, 328,000 of them by first-time buyers. But the government's own review found 78% of early users could have bought without the extra help. Most of the rest just bought bigger homes. Not really what the scheme was intended for...
The real problem isn't a lack of buyers. It's the time and cost of building. Zoopla suggests building isn't viable across almost half of England outside London. The HBF estimates that building a new home costs £76,000 more than it did in 2020. Half of that is materials and labour; the rest is taxes, levies and regulation, including a Building Safety Levy that arrives next month. This new scheme will likely follow the same path as Help to Buy. It won't lower the cost of a single brick or shorten the time a development sits in planning. It simply changes who can afford the sticker price.
Who wins at the open on Monday?
Persimmon and Barratt Redrow are arguably the best placed, with Taylor Wimpey and Bellway alongside. Then there's the second layer down, what some might call the picks and shovels... Quite literally in this case. These include Ibstock, Forterra and Genuit. These names only rise if building starts to accelerate, which I would guess is a medium to long-term story. The one I'm particularly interested in is Ibstock, currently one of the most shorted stocks in London, with roughly 16% of its shares out on loan. So, who knows, there could be a squeeze in there at some point.
The Comms Read: Look at how this reached the market. Not a Treasury statement, but a Sunday paper headline timed for the start of the Labour conference, pitched squarely at young voters drifting to the Greens. The explanation as to how this will be funded is: "reprioritising existing government budgets"… So, no specifics, which is starting to feel like a theme with Mr Burnham.
That makes it a political announcement first and an economic one second. Headline now, detail at the Budget in a month. For ministers, that's the point: bank the conference applause and leave the arithmetic for later. For markets, it means a month of waiting for the fine print.
For listed builders, my guidance is simple: have a line ready for Monday on what the scheme is worth to your business, before a journalist or analyst works it out for you. I wouldn't wade into the politics though. Look too keen by praising the scheme and you come across as greedy. Criticise it and you look callous towards struggling first-time buyers.
The HBF has already shown how it's done. It welcomed the announcement, but hung its support on "a well-designed scheme". Warm enough not to look ungrateful, conditional enough to keep lobbying on the detail.
For the last decade, Labour criticised Help to Buy, saying all it did was push up house prices and make homes even less affordable for the public. The government's own review this month called Help to Buy "very high value for money". So why the U-turn? The review gave them cover, young voters gave them a reason, and it's a lot easier than forcing through the aforementioned medicine.
The psychology: this is narrative vs flows. Monday's story will be "Help to Buy is back, buy the builders." The numbers that matter (permissions, starts, bank lending) are all heading the other way.
What to watch: whether Monday's jump survives until the Budget on 28 October, when we finally see the developer fees and how it's paid for. After that, watch 2027 forward orders in trading updates, and gilts, because boosting demand without adding supply feeds inflation.
The bull case for UK builders isn't about how many people want a house. It's about how many homes developers can build to a good standard while still delivering a profit that satisfies shareholders.
GLA & DYOR.
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