Bellway, one of the United Kingdom’s leading housebuilders, expects the government’s new Your First Home (YFH) scheme to potentially increase its annual home completions by around 10%, but also anticipates lower output and profits in the short term due to market uncertainty and delayed buyer decisions.

The YFH programme, announced recently by government officials including Andy Burnham and expected to launch after Chancellor John Healey’s budget on October 28, aims to assist first-time buyers in England. It offers a government-backed equity loan equivalent to 20% of the purchase price for new-build flats or houses, with a minimum buyer deposit set at 2.5%. The scheme includes income and price caps designed to target modest homes and exclude higher earners.

Jason Honeyman, Bellway’s Chief Executive, indicated that while YFH could provide significant relief for first-time buyers and support increased housing volumes, its launch might initially slow the market as some potential purchasers hold off in anticipation. He projected that Bellway could see its deliveries rise to approximately 10,000 homes per year once the scheme is fully operational, up from the 9,000 to 9,400 completions targeted for the current financial year, a decrease from 9,695 homes built last year.

This year’s reduced volume is attributed to a combination of factors, including a lower order book, ongoing economic uncertainty, affordability challenges, and higher construction costs—reported between 3% and 4%. Honeyman noted that demand remained constrained, particularly in southern England where first-time buyers are more reliant on the support programme. In contrast, sales dynamics in northern England and Scotland have shown little change.

Financially, Bellway reported revenue of £3.16 billion for the year ending August 31, up 13% from the previous year, while underlying pre-tax profits rose 5.7% to £305.7 million. However, analysts have since adjusted profit forecasts downward, anticipating a decline amid fewer completions and increased input costs. One analyst projected pre-tax profits could drop to approximately £270 million or lower this year, with profit margins squeezed further by the challenging market conditions.

Despite these pressures, Bellway announced a £150 million share buyback plan to be executed before next summer. Shares responded with a slight decrease but remained above their lows from earlier in the year, when broader market sentiment weighed on housebuilders due to economic uncertainties, including geopolitical tensions and rising mortgage rates.

The Your First Home scheme is expected to benefit major housebuilders like Bellway, Persimmon, MJ Gleeson, and Taylor Wimpey. However, some companies such as Berkeley Group—which focuses on higher-priced London properties—and Vistry Group, known for affordable and social housing, may see limited impact from the initiative.

Bellway, founded in 1946 in Newcastle upon Tyne, continues to navigate a challenging housing market marked by affordability constraints and economic headwinds, while positioning itself to capitalize on forthcoming government support aimed at first-time buyers.