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Brokers bemoan overpriced new builds and demanding developers ‒ analysis

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  • 11/10/2019
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Brokers bemoan overpriced new builds and demanding developers ‒ analysis
Developers are too focused on building small properties that deliver large profits, rather than meeting buyer needs, brokers have suggested.

 

On several occasions the government has warned that developers were often failing to deliver new homes that not only match the local style of properties, but also do not meet the needs of local would-be buyers.

This week, writing in The Times, housing secretary Esther McVey said: “Policy-making for too long has allowed too many of our proud towns to be scarred by architects and planners who have no regard for what local residents want.”

And brokers have agreed that developers may be too preoccupied with what properties may deliver the biggest profit margins, rather than what’s most needed.

 

Overpriced and small

Andy Wilson, founder of Andy Wilson Financial Services, said that in his area of Lincoln most new builds were located on large developments run by some of the main UK housebuilders, and said that while they were generally well built they tended to be “overpriced in my view, driven in part by Help to Buy deals and come at quite a premium when compared to similar but older properties”.

He noted that these new builds tend to be small when compared to older buildings of a similar style, and while this does not initially put buyers off, he added: “I think they soon come to realise that space is at a premium and as their families grow the homes become too small very quickly”.

Wilson also noted that parking tends to be a big issue on large developments in the area.

He explained: “With developers keen to cram in as many properties on their sites as possible, even five-bedroom houses may have only one garage or one parking space, but quite often the resident family will have up to four cars. This means they overflow into on road parking, jamming up the estates.”

 

There’s more to the market than first-time buyers

Paul Flavin, managing director of Zing Mortgages, said that developers need to focus their efforts more on the last time-buyer market, adding: “When was the last time we saw an estate being built containing bungalows with decent gardens?”

Flavin noted that he has seen first-time buyer flats at less than 35m squared because “it’s profitable and builders can get away with it, but there is nothing for the last-time buyer”.

He continued: “I’m not saying builders should be more charitable, but when planning is granted there should be more attention paid to what the community needs rather than what makes the builder most profit. After all, not doing so will break up communities as young families and the retired won’t have been catered for.”

 

Going green

However, Greg Cunnington, director of lender relationships and new homes at Alexander Hall, said he had been really impressed with some of the innovation seen in recent developments in the capital.

Noting that the brokerage works with most of the major developers, he said: “The amount of thought that is now going into lifestyle for the clients who will be purchasing, and the focus on the amenities of sites, as well as the design of the developments and individual flats themselves, has really evolved in London in the last two years.”

He gave the example of a new development that completes next year, which has been designed to be eco-friendly despite being a high rise flat development, with each flat enjoying its own garden area on the balcony.

Cunnington continued: “We are also seeing developers put a higher focus on the energy efficiency of these new build flats. Lenders in turn have followed this lead, with some such as Barclays offering lower rates where these properties with certain developers can evidence this, which again leads to a positive client outcome.”

 

Too demanding

However, some brokers point to difficulties in dealing with developers.

Wilson said that his firm did not work with developers directly, as they tend to have the mortgage business “sewn up at an early stage” with their own advisers “however much of a conflict of interest this may create”.

He continued: “We have also found developers are way too demanding and have little patience.”

 

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