Allica Bank enhances development exit product to support Your First Home schemes

Allica Bank has enhanced its development exit bridging product to help developers take advantage of the government's new Your First Home scheme, confirmed in this week's Budget.

The bank will now consider development exit finance for residential schemes worth more than £2.5m with more than one unit. Pricing is set at 0.65%, with a maximum LTV of 75%. Loans run for up to 24 months with no exit fees.

Applications will be assessed case by case for developments delivering homes designed to meet the scheme's first-time buyer criteria.

Bridging the gap to launch

Your First Home, backed by £4.7bn, will offer first-time buyers a 20% government equity loan on new-build homes, with deposits from as little as 2.5%. Applications are expected to open in February 2027, with the first property sales expected from April 2027.

That timing creates a challenge for developers. Schemes completing over the coming months may struggle to sell until the scheme opens, as buyers who qualify could wait for the extra support. Meanwhile, developers are still paying interest on their development loans, which often come with tight deadlines.

Development exit finance is designed for exactly this situation. It repays the original development loan once building work is complete, usually at a lower cost, and gives the developer time to sell units at full value rather than rushing sales to meet a deadline.

Backing the builders

But we can't lose sight of the people actually building these homes.

Steve Palfreeman, Head of Sales for Bridging Finance at Allica Bank, described the Budget as a real boost for developers and welcomed the focus on helping more people onto the housing ladder. He said that delivering more homes depends on brokers and developers having the financial backing to keep building.

He added that the enhanced product gives developers more flexibility and confidence to plan ahead, so they can spend less time worrying about finance and more time building homes.