The Budget’s housing measures point in two directions: help for first-time buyers and savers, alongside higher taxes on rental income. That combination matters because the policies address different parts of the housing market, and they won’t affect households in the same way. The biggest potential boost to transactions is Your First Home, an equity loan scheme for eligible buyers purchasing new-build homes from participating developers in England. Its reach, though, depends on whether the homes and locations available through the scheme match what eligible buyers can afford and want to buy.
Deposit support targets new-build buyers
Eligible first-time buyers will be able to buy with a 2.5% deposit and a government-backed equity loan worth 20% of the home’s price. The loan is interest-free for its first five years, which could ease the initial cost of buying for people who qualify. Regional and income price caps apply, so the scheme’s reach will depend on where buyers are looking and whether they meet the criteria. A lower deposit requirement can help with one barrier to purchase, but it doesn’t remove the need to meet the scheme’s conditions or secure a suitable home.
The scheme was announced in September, with eligibility details confirmed in the Budget. Rightmove’s Director of New Homes, Alex Slater, called it “a positive step for first-time buyers,” pointing to persistent affordability pressures. The average two-year fixed mortgage rate is 5.54%, up from 4.25% before the war in Iran started, increasing monthly mortgage costs. That change helps explain why deposit support may attract attention, while also showing why the deposit is only part of the affordability calculation: buyers still need to consider the cost of borrowing.
Slater said the scheme could open a route into home ownership for more first-time buyers and support the new-build market. The intended link is direct: the loan applies to purchases from participating developers, so any added demand would be focused on eligible new-build homes. Its effect will depend on how many buyers qualify and how many participating homes are available in the locations they want. That’s a narrower test than asking whether the scheme will improve access to housing generally.
Buyers can review the Your First Home scheme details and use the scheme calculator to check what they could afford. The tools can help people understand the scheme’s terms and their own position, but a calculator can’t tell them whether a home they want will be available through a participating developer.
Other Budget measures affecting households and landlords
Several other announcements could shape household finances and housing decisions. They cover energy costs, savings and rental income, so their effects will be spread across different groups rather than concentrated on would-be buyers. Here’s the thing: the headline measures may sound like a single housing package, but each one has its own eligibility rules, timing and practical reach.
- Energy bill payment: Eligible households in council tax bands A to D in England are set to receive a £100 Household Energy Payment from January 2027. The payment could help with household costs, though it’s limited to eligible households and won’t be available to everyone. Households can check their council tax band.
- Lifetime ISA charge: From 29 October 2026, the withdrawal charge for eligible first-time buyers purchasing a home above the £450,000 Lifetime ISA cap falls from 25% to 20%. A charge will still apply, but buyers will keep more of their savings. The change softens the cost of a withdrawal in this specific situation; it doesn’t remove the cap or make the purchase charge-free.
- Cash ISA allowance: The planned reduction in the tax-free savings cap from £20,000 to £12,000 has been scrapped. People saving for a deposit can continue to put up to £20,000 a year into a Cash ISA without paying tax on the interest. That preserves an existing route for tax-free saving, although it won’t by itself determine how quickly someone can build a deposit.
- Tax on rental income: From 6 April 2027, property income tax rates will rise by two percentage points in England, Wales and Northern Ireland. The rates will be 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers. For landlords, the change alters the tax due on property income; its effect on a particular household will depend on its circumstances.
Market impact will vary by location
Your First Home could bring some additional first-time buyers into the market, with a direct focus on new-build homes. The savings changes may also affect how quickly some buyers build a deposit, while higher property income tax rates change the financial picture for landlords. These measures pull on different parts of the market, and the effects won’t necessarily arrive at the same time.
This is more significant than it looks: the scheme’s potential reach is shaped by the homes participating developers offer, the regional and income caps, and the locations buyers are considering. Similar schemes typically depend on whether eligible homes line up with buyers’ budgets and preferences; the announcement alone can’t establish how many purchases will follow. And this is the part most people overlook: support for a deposit doesn’t settle the separate question of ongoing mortgage costs.
Those measures sit alongside the factors that shape local activity: buyer affordability, mortgage rates, available homes and the balance of supply and demand. The practical effect will therefore vary between areas and price bands. If you’re working in this space, the useful measure will be how the policies meet local conditions, rather than the number of announcements in the Budget. That said, the information here doesn’t establish what that response will be.
The changes also create distinct questions for households. A first-time buyer may focus on eligibility, deposit size and borrowing costs; a saver may look at the Cash ISA allowance; a landlord may focus on the future tax rates. No single measure describes the whole market. Uneven effects, by design.
Rightmove’s monthly House Price Index tracks market conditions as they develop, offering a way to follow local activity alongside these policy changes.
Source: Budget 2026, HM Treasury.
