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A little time and energy could pay off for new build broking – Calder

by: Craig Calder, director of mortgages at Barclays
  • 29/05/2018
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A little time and energy could pay off for new build broking – Calder
Issues surrounding the general housing market and the supply of affordable new builds always seem to consist of a combination of change, statistics and opportunities. With that in mind, let’s break down the current state of play.

 

Change

Former Northern Ireland secretary James Brokenshire has been appointed Secretary of State for Housing, Communities and Local Government.

He replaces Sajid Javid who has taken on the role of home secretary. Dominic Raab remains as housing minister, after taking the position from Alok Sharma in January amid a wider reshuffle. Dominic Raab is the fourth housing minister in three years which does underline a lack of stability in such an important role.

Understandably the wheels of politics do move quickly, and while it would be great to achieve stronger levels of stability in these roles this isn’t always possible.

However, it is key that cohesive short, medium and longer-term plans remain firmly in place to bolster affordable housing numbers, whoever happens to be in the driving seat.

 

Good data

An investment programme of at least £44bn over the next five years was announced at the Autumn Budget 2017 to help raise the supply of homes to an average of 300,000 a year by the mid-2020s. The Spring Statement outlined further steps to support these comprehensive government plans.

The measures include £100m to back the Mayor of the West Midlands’ ambitious plan to deliver 215,000 homes, and confirmation of a £1.67bn funding package for London to build affordable homes.

A £60m investment was also announced to boost the Housing Growth Partnership fund which supports small and medium sized housebuilders enabling them to invest in housing projects and develop their businesses.

New build dwelling starts totalled 162,180 in the year to December 2017, up by 5% compared with the year to December 2016.

During the same period, completions totalled 163,250, an increase of 16% compared with last year.

 

Bad data

However, on a less positive note, the number of new homes being built in London dropped to the lowest level since the midst of the financial crisis in 2010.

And according to the National House Building Council (NHBC), new home registrations – where builders submit paperwork when they start work on a site – fell by 23% by the financial year end in March compared to the 12 month period before.

As a result, the number of registrations dropped in 10 out of 12 UK regions during the first three months of 2018, with London seeing a drop of 46% compared to the same period the previous year. The NHBC attributed this to the series of terrible weather conditions, as well as the economic and political uncertainty in the capital’s property market.

 

Lender competition

Despite an uncertain – but understandable – start to the year for London new-builds, the NHBC sounded a note of optimism as there are a number of large-scale developments of 1,000-plus homes in the pipeline for the capital.

How this translates to the rest of the country remains to be seen, but another positive thing to note is that the NHBC are pushing new building methods.

These include modular factory-built housing plus pod bathrooms and kitchens as one way to combat the skills shortage hitting the UK’s building industry and to boost the supply of new homes.

Lenders are also upping their games when it comes to new build.

This is a sector which has long been crying out for fresh support and is a market we are aiming to be more active in by pushing competition with policy, underwriting and speed to offer.

And we expect other lenders to follow suit.

 

Opportunities

With potentially increased competition and shifting lending criteria, intermediaries need to be fully up-to-date on the variety of available products and able to identify the best available options.

This is apparent for current purchases as well as for future sales, especially if the original purchase was facilitated through a government initiative such as help-to-buy or shared ownership.

I expect demand for new build properties to increase further, meaning that brokers identifying a gap in the new build market could – through a little more time and energy – make hay as the sun finally begins to shine.

 

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