Budget 2026: Turning planning permissions into homes

 The Government has done a lot on planning reform to create more opportunities for housing delivery. However, for much of this year the challenge has been making sure those opportunities translate into new homes. The Budget’s £4.7 billion Your First Home scheme addresses an important part of that, which is whether people can afford to buy. As planning reform will only achieve so much if housebuilders can’t sell the homes they have permission to build. 

Your First Home  

Your First Home will offer first time buyers Government loans, with a minimum deposit of 2.5% and no interest on the loan for the first 5 years. That should go some way to help buyers who struggle to save a deposit and give housebuilders greater confidence to continue building. Government expects the scheme to help around 70,000 households and support delivery of an estimated 20,000 new homes. 

This is a welcome intervention. But for many developers, its usefulness will come down to the property price caps. 

The Budget says these will be “based on local authority median prices” with separate caps of £650,000 in inner London and £500,000 in outer London. Put simply, the cap sets the maximum price of a home that can be bought through the scheme. Where that line is drawn will determine how much of a developer’s housing can benefit. 

The effect could vary considerably from one development to the next. For example, a 3 or 4 bedroom home might qualify in one location, while elsewhere only 1 or 2-bedroom properties fall below the cap.  

We can’t yet say which areas will fall into which category. Outside London, the Budget doesn’t set out the individual caps or explain exactly how they will be calculated. At present all that is know is that these will be “based on local authority median prices.” Government should provide that detail quickly so developers can assess what the scheme means for their sites. 

This matters because first time buyers do not all need a one-bedroom flat. Some will be families who have rented for years and need more space. If the cap excludes the homes they need, the scheme will do less for those households and for the housebuilders delivering that type of housing. 

An authority wide median (the middle price of homes sold in an area) also needs careful consideration. Prices can vary considerably within a local authority, and the mix of existing homes may differ from what is being built. A single figure will not necessarily reflect the market around every development. 

For housebuilders, the exercise will be to compare the cap with their selling prices, plot by plot. Does most of a development qualify, or just its smallest homes? Could a modest pricing adjustment bring more properties within reach, or would that make the homes unviable to build? 

A builder with a broad range of properties may find that the scheme helps sales on part of a development. A smaller builder with one site and a limited choice of house types could find that very little qualifies. The benefit will depend on what is being built and where, as well as the size of the business. 

Government should keep those effects under review as the scheme gets going. Supporting first time buyers is the right ambition, but the terms need to work for the homes people need and developers can realistically deliver. 

  

Biodiversity Net Gain exemption for residential brownfield sites  

There are welcome measures on development costs too. The proposed Biodiversity Net Gain exemption for residential brownfield sites up to 1.5 hectares in England could help smaller schemes.  

  

Cessation of new building regulation changes  

The commitment to avoid major building regulation changes for the rest of Parliament, except continued building safety improvements, should also help builders plan with greater certainty. 

  

Cambridge Development Corporation financing pilot  

The Cambridge Development Corporation financing pilot is particularly welcome, because land assembly and upfront infrastructure often determine whether development can proceed. Its practical value will depend on the terms and availability of that finance. 

 

Overall costs and impacts 

However, looking at individual requirements will only get us so far. Government needs to look at what they cost together. Affordable housing, infrastructure contributions, environmental requirements and taxation all have to be funded from the same development. Each may appear reasonable when considered separately, but the combined bill can make a scheme commercially undeliverable. If that happens, the affordable homes and infrastructure do not get built either. 

That is why viability needs to be part of the discussion from the outset. We should be asking what a site can deliver, what is preventing it from coming forward and whether funding or a different approach to its obligations could get it moving. 

  

Social and affordable housing investment, cheaper council borrowing and VAT relief on qualifying land sales 

Additional social and affordable housing investment, extended access to cheaper council borrowing and VAT relief on qualifying land sales are also positive. We should support a substantial increase in council housebuilding, but alongside that, we still need a functioning private housing market in which builders of all sizes can invest and deliver. 

  

Conclusion  

While this Budget deserves credit for addressing buyer demand through Your First Home and some development costs it doesn’t do much to ensure that all those measures work together on actual sites. A planning permission nobody can afford to build is hardly a housing success. The measure that matters is how many permissions become starts on site, and how many starts become homes people can move into.