Speaking to this publication, Jonathan Evans, new-build lead at Skipton Building Society, said recent research by the firm showed a “strong preference for new build”.
The research showed that around 44% of aspiring first-time buyers are actively looking at new builds, compared to 30% looking at older properties.
He said it was partially due to having more amenities like bathrooms, better energy efficiency – as they have up-to-date technology – and better materials that insulate and retain heat better, leading to lower running and maintenance costs.
Evans said lower running costs could also have a ramification for affordability, which he said was a “massive issue” in the industry, along with saving a deposit.
“A lot of people will be putting all of their savings into the transaction to get them on the property ladder, so if you buy a second-hand property, you then get all the maintenance and repair work that comes as the legal owner, whereas with a new build, most of them will come with a warranty, and the likelihood of having to then replace a boiler or a roof or the windows is significantly lower than that of a second-hand property,” he said.
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New build is a “way for people to not only buy a nice new property, have it [be] energy efficient, but it also helps them with the current challenges that people are facing within the market at the minute,” he said.
“One of our strategic priorities is to help more first-time buyers onto the property ladder, because we’re founded on fairness, and what you tend to find is new build that, this year alone, for 2025, 70% of the new-build cases that have come in have had at least one first-time buyer on it, versus just 66% in 2023. Not only is the research that we’ve done pointing towards more first-time buyers favouring new build, we can actually see with our own lending that’s coming in through the door.
“When you buy [a property] off a developer, most of the time, you can walk into your development, pick the house that you want, and you’re getting it for a fixed price, so you’re not having to deal with any estate agents or bid against other buyers. You don’t have to play the waiting game.
“Another key thing… that we also see within Skipton [is] that not only do we see more first-time buyers on new build than the standard business, but more of the business goes to offer.
“When you look at application to offer conversions, new build outperforms standard purchase. If you just think about if you’re buying off a developer, if you’re a first-time buyer, you’re not buying off someone that’s stuck in a chain – you’re less likely to have a chain collapse,” he added.
Evans said there had been a trend over the last few years of lending increasing their new-build loan to values (LTVs).
“If you’re a lender, lending conditions are actually pretty good, because we’re not too worried about unemployment. House prices are forecast to go up, so we’re quite keen to lend money,” he noted.
He said the increase in LTVs “probably will increase for some lenders, if they’re comfortable to take on the risk”.
Track Record and Delayed Start deals have been ‘well-received’ in new-build arena
Evans said both the Track Record product and Delayed Start deal had been “well-received” in the new-build space.
He said that when it launched its Track Record mortgage in 2023 – which uses rental history in its affordability calculator and can go up to 100% LTV – a number of large new-build firms within the UK enquired if it could be used for new build, which it can be.
Evans added that there had been a “significant number of applications” come in on Delayed Start for purchasing new build, and its first case for Delayed Start was a new-build case that had already been in its pipeline on a standard product.
The deal has no mortgage repayments due for the first three months, which aims to give breathing room to first-time buyers.
“The customer had some issues with rent, and it meant that the first two months, the rent payment was going to be in place at the same time as the mortgage, and they really needed extra breathing space,” Evans explained.
Evans said brokers should “brush up on the knowledge around these innovative products, educate their introducers and developers on what’s available, and that could help create demand”.
“It’s looking at the bigger picture of brokers… having those conversations with developers, and developers are then taking that and speaking, so customers are made aware that these products are available. It then creates more demand for the industry as a whole,” he said.
“It then means that the customer is engaged with a developer and a broker, so that when the time comes that they do want to buy, they’re already being nurtured by the broker,” he said.
Planning system ‘needs major reform’
Evans said the planning system “needs major reform” and the government was “slowly starting to do that”.
He said the timeline for the Future Homes Standard “needs to be published ASAP”.
“At the moment, you have developers who are in limbo… if they don’t know what type of houses they’re meant to be putting on it for or if they are having to still put gas boilers in them,” he noted.
He pointed to the government’s pledge to introduce 400,000 new skilled workers within the construction industry, and measures in the Budget to offer free apprentice training for under-25 apprentices.
“It would be quite interesting to see how that flows through into the new-build world with the SME developers. There are a number of challenges, such as supply, planning system, skill shortage, and affordability and deposit issues as well.
“But what I would like to say is you don’t always need big regulatory changes. There is a lot of freedom within the framework, so we’ve operated with our Track Record and Delayed Start record, as have other lenders, so there is a bit of freedom within the framework for lenders to do stuff if they feel comfortable doing it,” he added.
New-build premium is ‘real’
Evans said the new-build premium is a “real thing”, but borrowers are “buying a brand-new product on the market”.
“You’re getting to walk into this new house… that, quite often, has warranties and incentives. It’s unlike other transactions. Another thing you need to factor in is the constant change in the supply chain for the developer, so they have to price that in.
“When you think about it going forward, if they’re then having to put in solar panels, batteries, air source heat pumps and so on, these things cost money, and at the end of the day, they are a business. They need to make their margins.
“The fact that more and more lenders are going up the LTV curve, I think that points to the fact that lenders aren’t worried about new-build valuations, because if they were, they wouldn’t be lending at the high LTVs, and house prices are forecasted go up over the next five year[s],” he said.
