UK Budget 2026: measures outlined to support housebuilding

Beth Walters of Pinsent Masons was commenting after UK chancellor John Healey set out the government’s intention to allow local and regional authorities in England to retain 100% of business rates income before the end of the decade, to support the government’s devolution agenda. The government said it intends to consult on “how best to achieve 100% business rates retention” and will begin the process by ensuring Mayoral Strategic Authorities receive a 20% share of business rates from April 2027. 

The plans form part of a wider UK government drive to further devolve decision making and funding powers in England, with a view to building “a globally significant cluster in every nation and region” and facilitating growth and place-making across the country.

Walters said the government's emphasis on devolution could prove to be a significant reform for the residential and mixed-use development sector and that the Budget reinforces a shift towards empowering local and regional leaders with greater control over investment decisions, regeneration priorities and housing delivery.

“Giving mayoral authorities and emerging strategic authorities greater influence over how public investment is deployed within their areas has the potential to create a more locally responsive development environment which aligns with local housing needs,” said Walters. “In practice, this could result in faster decision making, more targeted public investment including the deployment of patient and flexible capital to address local development barriers, and stronger alignment between housing delivery and wider regeneration objectives.”

“A significant aspect of the devolved approach is the creation of new Good Growth Funds, designed to enable local leaders to bring together different funding tools for one approach to local investment and to attract private sector investment. Bringing together public funding streams alongside institutional and private capital could help to unlock regeneration opportunities that have previously struggled to progress due to fragmented funding structures or viability constraints. For large-scale residential and mixed-use schemes, particularly those requiring substantial enabling infrastructure or operating across multiple phases, a more co-ordinated local investment framework could improve development viability and accelerate delivery,” she said.

“Developers may see opportunities for funding partnerships, particularly where upfront infrastructure costs, remediation requirements or complex regeneration challenges have constrained delivery. Locally controlled lending mechanisms could support a wider range of housing-led regeneration projects than traditional grant funding alone,” Walters added.

The indication, from the Budget, that mayors could play a greater role in decisions relating to the use of the public estate, is another significant announcement for the residential and mixed-use development sector, according to Walters.

“Land assembly remains a key obstacle to the delivery of large scale residential and mixed-use schemes,” Walters said. “Greater local influence over surplus public land, combined with devolved funding and investment powers, could help bring forward sites that have historically been difficult to unlock.”

“For developers, the key opportunity will lie in engaging with devolved authorities as increasingly influential partners in shaping investment priorities, infrastructure delivery and local housing delivery at scale. Those able to align development proposals with local economic and regeneration objectives are likely to be well positioned as the next phase of the devolution agenda takes shape,” she said.

Other measures contained in the chancellor’s Budget announcement on Wednesday could boost housing delivery too, Walters said. She highlighted initiatives to stimulate demand, such as the £4.7 billion ‘Your First Home’ scheme and introduction of a First Time Buyer ISA from April 2029, to replace the Lifetime ISA (LISA), as examples.

The Your First Home scheme will provide 20% equity loans to first-time buyers “who would not otherwise be in a position to purchase a residential property”, the government said. Income caps will apply, as will minimum and maximum deposit requirements – to be set at 2.5% and 15%, respectively. Borrowers under the scheme will benefit from “a five-year interest free period”, with the government promising that interest payments will only increase gradually thereafter. Developers will be expected to help cover the scheme’s costs. The first loans under the scheme are expected to be issued by April next year. An overall annual funding cap for the scheme will apply.

Walters said: “The Budget’s package of support aimed at first time buyers represents a significant demand side intervention which should be welcomed within the residential development market. Whilst the government’s policy focusses on increasing housing supply, these measures recognise that sustained delivery also depends on maintaining a healthy pipeline of purchasers whilst acknowledging that stronger first time buyer participation is significant given the role that first time buyers play at the base of the housing ladder. Increased access to this buyer group has the potential to support transaction chains, improve sales absorption across new developments and underpin confidence in future residential development schemes.”

“On the Your First Home scheme specifically, the scheme has the potential to bring forward a substantial cohort of first time buyers. For developers, this should help improve sales rates, supporting both cashflow and delivery certainty. Although participating developers will be required to contribute towards the cost of the scheme, many will view this as a trade-off against the benefits of improved sales rates, a wider purchaser pool and increased confidence when progressing future phases of development,” she added.

An additional £1.5 billion to deliver around 10,000 homes in England, targeted at increasing the number of council houses and other social rent properties within available housing stock, was also outlined in the Budget. VAT relief is also to be introduced on land sold to registered social housing providers, with a view to speeding up construction of social housing.

Walters said: “The government’s additional investment in the Social and Affordable Homes Programme provides a significant boost to the affordable housing delivery pipeline. Increased funding, targeted at social rent and council-led housing, has the potential to accelerate the delivery of affordable housing, support registered providers and local authorities in bringing forward new schemes and create greater certainty around affordable housing programmes over the coming years.”

“For developers, this may generate increased opportunities for partnerships, forward funding arrangements and bulk disposals to affordable housing providers, helping to support delivery and sales absorption across mixed-tenure developments. The commitment to long-term funding also gives local authorities and housing providers greater confidence to build capacity, plan future investment and bring forward larger-scale projects, whilst helping to meet growing demand for genuinely affordable homes,” she said.

Walters further welcomed plans announced to exempt residential brownfield developments on sites up to 1.5 hectares in England from biodiversity net gain requirements, as well as its commitment to avoid any major changes to building regulations for the remainder of the current parliament, except for improving building safety. That latter commitment, Walters said, “should provide greater regulatory stability, improving project delivery and cost certainty for developers particularly on large-scale developments with lengthy construction programmes”.