I feel like I’m in danger of sounding like a broken record; I’ve been saying for 5 years now that the way to achieve stability in the housing market is to increase supply and the best way of doing that is to build more houses.
The great news is this has started and we have seen a significant increase in house build particularly since the launch of Help to Buy and the equity loan scheme has now been extended to 2020. An increase in supply has to create an opportunity for brokers to write more mortgages.
The problem historically is that new build has been a closed shop with a small few specialist brokers dominating the space, making it very difficult for others to get their foot in the door. But the shape of the new build market is changing; the big players still dominate and will continue to work with preferred panels who will in turn need to recruit to cater for the increase in output from the likes of Barratt, Taylor Wimpey and Persimmon.
However what we are seeing is a return to the market of the smaller developer building a handful of units on a regional basis. And it’s here where there is real opportunity for brokers with high service standards to pick up some of the best quality leads in the market. The desire for new homes often sees multiple enquiries on a small number of plots; if you do your job properly those customer who don’t end up buying from the builder will buy elsewhere but still with your help.
Once you establish a relationship with a developer and they understand the real benefits of using a broker, especially in the post-MMR world, the control you give them is invaluable and they will drive leads your way as fast that you can call them. We have seen it so often on the popular developments that demand out strips supply by 10 to 1.
But you need to be prepared; you need to know your product and especially the different government schemes available. You also need to be prepared to “go retail”. Most activity on new build sites happens between Friday and Monday so you need to be available on those days to support your sites; this can be a total shift in your normal working week but a fundamental essential if you want to get into this market.
So how do you go about building these relationships? It’s not actually rocket science. Ask yourself how many times have you driven past a new homes development on your way to work or into town? Or take a drive around your local town’s ring road and have a look. Alternatively, go online and type in ‘new homes’ in your area and you will be surprised what comes up.
Then go and see them, ask them who they use and if they get a good service? And would they be interested in sending a couple of customers to you as a trial? Yes you will get a lot of knock backs but you will also come across sites that need the support of a good broker, particularly the smaller develops that are trying to compete with the big boys.
If you are more confident, then start to look at more specialised areas such as affordable housing. These customers need the help of a good broker more than ever. And if we consider the potential of products like custom build this really is a sector of the market that will grow quickly and be dominated by well organised intermediaries.