Like most aspects of policymaking, it looks set to be overshadowed by Brexit until at least Halloween. But the need for more homes is not going away, and nor is the pressure on politicians.
For brokers, the new-build sector might feel like a hard nut to crack, but here’s why you might want to consider it.
Growing sector
In recent years there has been a renewed focus on both housebuilding and helping people onto the ladder.
The former has seen £5.5bn pledged through the Housing Infrastructure Fund, and a government target of building 300,000 new homes a year by the mid-2020s.
It has certainly boosted the number of new homes built.
In the post-credit-crunch market, the number of new homes built fell to just 124,000 in 2012/13, but by 2017/18 it was up to 222,000, according to government figures – a significant rise.
The political impetus to boost homebuilding shows no signs of abating and, as a result, new build looks set to be a growing sector of the mortgage market for the foreseeable future, so it makes sense to ensure you’re equipped to take advantage of this growth.
Help to Buy has clearly played a huge part in supporting the sector and will continue to support your first-time buyer clients until 2023. The latest figures show that 221,405 properties have been bought with an equity loan since the scheme’s launch in 2013, with eight in 10 purchases made by first-time buyers.
Shared ownership schemes – and mortgages supporting them – are becoming more prevalent, while modern methods of construction are now recognised by lenders and developers as tools to help build homes at volume.
There is plenty of potential, but if you decide to tap into the new-build business opportunity, where do you start?
How to get into new build
Some brokers may consider new build a closed shop but, while it is definitely a specialist sector, there are ways to build up your experience in this growing market.
- Do your homework
First, learn more about new build and what makes the homebuying and mortgage processes different. Find out what mortgages are on offer from different lenders, as well as knowing the pros and cons of Help to Buy and other affordable housing schemes available. Make sure you stay up to date as this sector is constantly changing.
- Start small
Don’t try to run before you can walk. If you don’t have experience in the new-build sector, you are probably not going to immediately form a partnership with a large developer. Link up with small builders in your area and offer to help their buyers arrange finance. This is a good way to build your knowledge and expertise in new-build mortgages.
- Be prepared to work weekends
Many brokers work Monday to Friday but most people reserve their new-build home at the weekend, so you must be prepared to work on these days. You need to provide a seven-day service to homebuyers who want reassurance on the same day that they will be able to arrange mortgage finance for their new home.
- Make the most of your network
If you have a link to a local estate agent, make the most of the opportunity to build your network. Smaller scale homebuilders will often visit estate agent branches to discuss the sale and marketing of their homes. Make sure you’re made aware of these opportunities quickly and, if the estate agent can vouch for you, you’re in a good position to offer your services to the builder.
- Know where to place your case
Understand which lenders can deliver new-build mortgage offers reliably and quickly. Lending criteria vary considerably and service even more so. Consistency is key in this sector so find lenders, such as Halifax Intermediaries, that have the expertise and experience to overcome all the potential issues that can arise. Tried and tested processes are essential, and you need to be able to rely on your lender to deliver every time.
For the use of mortgage intermediaries and other professionals only
If you do not have professional experience, you should not rely on the information contained in this communication. If you are a professional and you reproduce any part of the information contained in this communication, to be used with or to advise retail clients, you must ensure it conforms to the Financial Conduct Authority’s advising and selling rules. Halifax is a division of Bank of Scotland plc. Registered in Scotland No. SC327000.
Registered Office: The Mound, Edinburgh EH1 1YZ. Bank of Scotland plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628. This information is correct as of September 2019 and is relevant to Halifax products and services only.
