Over the last two weeks, enquiries and reservations for new-build homes have begun to gather momentum as the market shows tentative signs of getting back on its feet.
Several brokerages have reported being contacted by new clients, as well as those who viewed properties before the Covid-19 pandemic who are now ready to commit to buying a new home. One broker said a large portion of her new-build business was coming from those classed as coronavirus key workers.
Like the wider purchase market, the new-build mortgage sector came to a standstill in mid-March when social distancing measures took hold and buyers feared for their job security.
One week later, on 23 March the UK was put into lockdown and the shutters went up on most construction sites, showhouses and sales offices.
Although restrictions have yet to be lifted, determined buyers are pushing ahead with purchases and building sites are beginning to reopen.
Helen Pierson, director, MAB network partner, said: “One of our developers sent out 171 brochures in the week beginning 13 April as a direct result of website enquiries.
“They subsequently secured nine reservations plus another three last week. Our numbers are well down on pre-coronavirus figures but it’s testament to the fact that where there’s a will there’s a way. Developers have started to bring furloughed sales staff back into the business in order to cope with demand.”
Key workers and committed buyers generating activity
Pierson said a lot of her recent business had been from key workers and those in industries unlikely to be furloughed, such as NHS staff, council workers and online retail employees. These buyers, said Pierson, were confident they have job security and were comfortable committing to a new home.
New-build director James Kinns, The Mortgage Store, said the reservations they were seeing originated from people who went to visit sites six months ago and have now decided to go ahead. And while enquiries remained low, said Kinns, they were being made by committed buyers.
“We’ve noticed that the people who are enquiring are motivated and serious buyers,” he said. “The numbers are down but certainly the people who are looking or talking to builders are keen to do a deal.”
L&C’s communications director David Hollingworth said the firm’s enquiries had doubled in the last two weeks from a heavily reduced base although a low level of enquiries had remained constant throughout the pandemic.
He said: “This recent uplift seems to indicate that the current difficulties are not necessarily putting buyers off and we’re seeing people making reservations and putting themselves in the best position they can be from a mortgage point of view.
“Whilst there’s clear limitations on available mortgage deals and how far prospective buyers can progress at the moment, they are keen to check that they will meet lender criteria requirements and be a good position to proceed when they are able.”
Builders encouraging sales
There are still over 460 new-build mortgage products available, according to Moneyfacts. While a handful of deals at 90 and 95 per cent loan to value (LTV) are still available, in the absence of physical valuations, few lenders will use a desk top valuation above 60 per cent LTV. This makes it impossible to move some applications along the mortgage process.
Keen buyers could also be taking their cue from the housebuilders themselves. Persimmon began opening sites this week and Taylor Wimpey plans to restart construction on 4 May.
To encourage people to buy their homes during the pandemic, builders are taking a pragmatic approach to sales.
Daniel Mumford, managing director, Grange Mortgage Services, said builders were letting buyers make provisional reservations with minimal holding deposits of between £50 and £90 instead of charging hundreds of pounds. And if families do not want to push ahead with the transaction immediately or are unable to, Mumford said builders were accepting a verbal agreement and an Agreement in Principle.