Assetz Capital, one of the UK’s leading specialist property development lenders, believes the combination of new first-time buyer support, greater opportunities for development finance and recent planning reforms could create the conditions for a substantial resurgence in SME housebuilding across England, following last week’s Autumn Budget…
First-time buyer support could outweigh rising mortgage costs
Assetz Capital welcomed the proposed Your First Home scheme, which is expected to allow eligible first-time buyers to purchase qualifying new-build homes with deposits as low as 2.5%, supported by a 20% government-backed equity loan.
The equity loan would initially be interest-free, substantially reducing the size of the conventional mortgage required.
Stuart Law, CEO of Assetz Capital, commented: “This could be a particularly powerful intervention in the new-build market.
“Although there is a risk of further increases in mortgage interest rates over the next 12 months, the reduction in mortgage borrowing made possible by a 20% equity loan could more than offset those increases for many qualifying first-time buyers, particularly during the initial interest-free period.
“That is a potentially significant improvement in affordability at precisely the time when the market needs more confidence.
“For SME housebuilders, improving purchasers’ affordability means more reservations, faster sales, reduced financing costs and greater confidence to commit to future developments.
“The scheme’s detailed rules will be important. In particular, we want to see regional house price caps and developer contribution requirements that allow smaller regional housebuilders to participate on commercially sensible terms.”
Public and private finance must work together
Assetz Capital also welcomed the Government’s wider commitment to mobilising institutional investment and the opportunities presented by the National Housing Bank and British Business Bank.
The company believes government-backed guarantees, portfolio risk-sharing and partnerships with established specialist lenders could help accelerate the provision of development finance to SMEs.
Law adds: “The opportunity for government is not simply to lend more public money directly. It is to use that capital intelligently to attract substantially greater amounts of private institutional funding.
“Established specialist lenders already have the relationships, underwriting expertise and delivery infrastructure needed to finance SME developers nationally.
“By working alongside those lenders, government-backed finance institutions could help increase lending capacity and accelerate the delivery of new homes without needing to build entirely new distribution networks.
“That public-private partnership model could become an important part of rebuilding the SME housebuilding sector.”
Supporting the resurgence of SME housebuilders
Assetz Capital believes the significant improvement in effective mortgage affordability offered by the proposed Your First Home scheme, together with greater institutional funding capacity and a more supportive development environment, could lead to a substantial increase in smaller housing developments coming forward.
By providing a government-backed equity loan equivalent to 20% of the purchase price, the scheme could reduce the conventional mortgage required by more than 20% compared with an equivalent purchase without the scheme, assuming the same buyer deposit.
This could materially reduce initial monthly mortgage payments and allow more first-time buyers to enter the new-build market, although the equity loan remains repayable under the scheme’s eventual terms.
The company has spent more than a decade supporting SME housebuilders through specialist development finance and believes the sector has considerable untapped potential.
Law continues: “SME housebuilders have a crucial role to play in addressing Britain’s housing shortage.
“Historically, smaller builders delivered a much greater share of the country’s new homes. Rebuilding that capacity is essential if we are serious about increasing housing delivery and creating a more diverse and resilient housebuilding industry.
“We want to see many more SME housebuilders entering the sector, existing developers expanding their activities and smaller sites across the country being brought into productive use.
“With the substantial improvement in initial mortgage affordability potentially delivered by Your First Home, alongside improved conditions for development finance, there is a realistic prospect of a resurgence in the number of active SME housebuilders over the coming years.
“Assetz Capital is committed to supporting that growth, providing the specialist development finance and expertise that smaller developers need to turn opportunities into completed homes.”
Planning reforms could unlock substantial new land supply
Looking beyond the immediate Budget announcements, Assetz Capital believes the revised National Planning Policy Framework (NPPF), published in August 2026, represents a particularly important step towards restoring growth in the SME housebuilding sector.
The reforms include stronger provision for small and medium-sized development sites, a clearer national planning framework and measures supporting the release of suitable land for housing.
The new NPPF expects local plans to allocate land for at least 10% of housing requirements on sites of no more than one hectare, with a further 10% on sites between one and 2.5 hectares, unless there are strong reasons why those targets cannot be met.
Law comments: “We are particularly encouraged by the very welcome changes to the NPPF introduced in August. In our view, these could be amongst the most consequential planning reforms for smaller housebuilders in many years.
“We expect the reforms to lead to very substantial growth in the availability of land suitable for residential development over the coming years, including the smaller sites that are especially important to SME developers.
“Greater land availability should also introduce more competition between development sites and, over time, help moderate land price expectations. This could materially improve the viability of building new homes, provided planning obligations and infrastructure costs remain proportionate.
“We believe this creates a genuine opportunity to reverse the long-term decline in the number of SME housebuilders and encourage a new generation of smaller developers into the market.”
A potential turning point for smaller housebuilders
Law concludes: “Taken together, the Budget’s proposed first-time buyer equity loan scheme, growing opportunities for institutional development finance and the August planning reforms could represent a genuine turning point for SME housebuilding.
“Greater availability of suitable land can improve development viability. Better access to mortgages can stimulate sales. And more effective development finance can enable builders to bring forward schemes that would otherwise remain on the drawing board.
“These measures need to work together, but the potential is considerable.
“We are increasingly optimistic about the prospects for a substantial recovery in SME housebuilding and, importantly, a return to growth in the number of smaller developers operating across the country.
“That would be good news for housing supply, regional economies, employment and the thousands of aspiring homeowners who need the industry to build more homes.”
