Insight: Planning and scheduling: A guide to good practice
Effective planning and scheduling can determine whether a construction project remains on track or becomes vulnerable to delays, disruption and rising costs.
The Government’s newly announced ‘Your First Home’ scheme has given the housing market something it has been missing for some time: a reason for optimism.
The proposed scheme will allow eligible first-time buyers to purchase a new-build home with a deposit of just 2.5%, supported by a government equity loan of up to 20% of the property’s value. The initial announcement was enough to send housebuilder shares higher, but the more important question is whether it will lead to more homes being built.
Because increasing demand is only part of the answer.
A welcome boost for buyers and housebuilders
High rents and the rising cost of living have made saving for a deposit increasingly difficult. Many prospective buyers can afford monthly mortgage payments but cannot accumulate the lump sum needed to purchase their first home.
Reducing the deposit requirement could bring more of these buyers into the market. For housebuilders, that could improve sales rates, strengthen confidence and provide greater certainty when committing to new phases of development.
The timing is significant. Planning approvals for new homes have reportedly fallen to their lowest level in 13 years, while high borrowing costs continue to affect both buyers and developers. A targeted intervention could provide some much-needed momentum.
However, demand alone does not make a development deliverable.
The viability problem remains
The cost of delivering new homes has changed considerably since the original Help to Buy scheme was introduced in 2013.
Construction costs remain high, finance is more expensive and regulatory requirements have increased. Developers must also account for planning obligations, infrastructure contributions and, from this month, the new Building Safety Levy on qualifying residential developments.
A buyer may now be able to afford a home with a smaller deposit, but that does not automatically make the scheme viable to build.
If ‘Your First Home’ is to increase housing supply, it must give developers enough confidence to bring forward stalled sites and progress future phases. Much will depend on the detail announced in the Budget on 28 October, including regional price caps, buyer eligibility and the contribution expected from developers.
If those terms are too restrictive, the scheme may generate interest without creating enough demand in the locations where new homes are ready to be delivered. If developer contributions are set too high, they could place further pressure on already tight margins.
Could the scheme push prices higher?
The original Help to Buy programme faced criticism for increasing demand without addressing the underlying shortage of homes. There are concerns that its successor could have a similar effect, particularly if supply cannot respond quickly enough.
This does not mean demand-side support has no value. The previous scheme helped hundreds of thousands of people buy a home and supported the delivery of additional housing. However, the success of ‘Your First Home’ should not be measured solely by the number of buyers using it. The real test will be whether it unlocks sites, supports construction activity and results in homes being delivered at the right price in the places where they are needed.
Turning renewed demand into delivery
For developers, the announcement is encouraging, but it is not yet a reason to rewrite every appraisal.
Until the full terms are known, sensitivity testing will be important. Development teams should consider how different price caps, buyer criteria and developer contributions could affect sales values and overall viability.
The renewed attention on first-time buyers also creates an opportunity to review the design and specification of proposed schemes. Homes must not only qualify for the programme. They need to meet what buyers can realistically afford once mortgage payments and other ownership costs are considered.
‘Your First Home’ could help get the market moving again. But if the Government wants it to get Britain building, it must be supported by a wider focus on planning, infrastructure and the cost of development.
A smaller deposit can unlock buyer demand. Turning that demand into completed homes will require careful policy design and commercially viable projects.