The views came in response to a Mortgage Solutions interview with Douglas Cochrane, head of housing development at Lloyds Banking Group, who argued that brokers should view the new build market as a specialism, akin to the way the buy-to-let market has developed in recent years.
He defended the practice of builders suggesting customers go to certain brokers when arranging a mortgage, saying: “It’s usually because they know the customer will be speaking to a specialist in the sector and they will get a particular process.”
However, Cochrane also hoped that the Financial Conduct Authority’s market review would uncover partnerships where directing of customers maybe occurring for other reasons.
Research is key
David Sheppard, managing director of Perception Finance, said partnerships between developers and brokers were particularly common with big developers, which was “frustrating” and argued that the idea that new builds should be viewed as a specialist sector “added to the opinion that the market is broken”.
He continued: “How is new build any more specialist than finding a mortgage for someone buying above a shop, in a high rise building, an unusual construction or an HMO for buy-to-let? The key is in the research which brokers do every day across a number of clients.”
Sheppard noted that while Cochrane was correct that these partnerships are not a “closed shop”, it is nonetheless a difficult shop for most brokers to gain entry to. He continued: “It is funny that on the one hand he advocates that more needs to be done for smaller builders, but smaller brokers who do not have the manpower to break what feels like a cartel are left out in the cold.”
Stuart Gregory, managing director of Lentune Mortgage Consultancy, said he once approached Redrow to see if the housebuilder wanted to partner with a local mortgage broker when it started a new development in Lymington, which had received local opposition.
He continued: “Their response was ‘thanks, but no thanks’ as they have their own specialist new build broker in Peterborough,” a mere 172 miles away.