FirstBuy builders push own brokers on clients
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Concerns are growing that house builders are breaching FirstBuy guidelines by forcing borrowers to choose from a restricted panel of brokers.
Developers claim that FirstBuy borrowers are free to use brokers and solicitors outside their recommended panels, but their terms and conditions, and anecdotal evidence suggest otherwise.
A spokeswoman for Taylor Wimpey says: “We encourage customers to use our recommended IFAs and solicitors who are familiar with the FirstBuy scheme, but they are not under any obligation to use them.”
However, Taylor Wimpey’s terms and conditions for FirstBuy on its website state: “Applicants will need to use a mortgage broker from Taylor Wimpey’s panel.”
Similarly, Barratt Homes’ terms and conditions say: “All Barratt offers are subject to the use of a Barratt nominated independent mortgage adviser and solicitor.”
A spokesman for Barratt says: “Customers are at liberty to choose whoever they wish, but we offer a recommended panel.”
Darren Hall, principal at SDG Hall Financial Services, says that he secured an agreement in principle for one FirstBuy borrower, but she was told by the developer she would have to restart the process using a broker on its panel.
Hall says: “She was given no choice in the matter and decided not to proceed with FirstBuy.”
A spokeswoman for the Homes and Communities and Agency, which administers FirstBuy, says it is normal for developers to have lists of suggested firms.
But she says: “Developers should adhere to our guidelines, which make it clear that borrowers should be free to use any company and should not be pushed towards using a certain firm.”
Ray Boulger, senior technical manager at John Charcol, says that while borrowers may not have to use one of the recommended firms, in reality they have little choice.
He says: “These are first-time buyers who are naïve about the buying process and will not want to rock the boat by going against what they have been told.
“I understand there is pressure on borrowers to use the recommended firms and the problem is that they may get biased advice as brokers who have a relationship with a developer are unlikely to suggest alternatives to FirstBuy.”
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Readers' comments (14)
Anonymous | 14 Nov 2011 10:03 am
In reality most advisers will struggle with the specialist knowledge required in New Build and often cause issues with this in the transactions, hence why builders are so protective over their sales.
Its not just about the right LTV, its incentives and knowledge of lenders who are down valuing sites etc. New Build is so specialist that for me its dangerous to get involved in this market unless you have specialist knowledge.
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Anonymous | 14 Nov 2011 10:20 am
What a stupid statement with a little research it's quite easy for brokers with a reasonable level of experience to advise in this area. I have lost cases on shared ownership where the builders have insisted that their own brokers be used and the level of advice was terrible.
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Mortgageboy | 14 Nov 2011 10:30 am
I agree, there are only a few lenders involved with this scheme and it wouldn't take long to read their criteria.I have a lot of new-build experience but even I dont like the way customers are herded towards newbuild brokers especially when I lose the business of a valuable client who should be able to shop around for the best advice.
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roger travis | 14 Nov 2011 10:41 am
@Anonymous | 14 Nov 2011 10:03 am
i think this is the most worrying statement "avoiding lenders who are downvaluing sites". are your clients therefore paying too much for the property just by choosing a lender who is not downvaluing to make it go through easier?
had you gone to the "best lender/product" would your clients have been able renogotiate the purchase price to the "market value"?
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Roger Watts | 14 Nov 2011 10:47 am
I was a broker for 30 years and I'm also a developer now. I would not want a broker acting who was not tried and tested in this area as it's often the case that some brokers are better than others, as in all trades. When you have this sort of money invested you don't want to take chances with ineptitude,so yes, you use my broker if you want my property.
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Anonymous | 14 Nov 2011 10:55 am
I agree with the original comment about new build being specialist. I was a BDM for a lender in a previous life and was often having to rescue cases that had been submitted incorrectly by non new build brokers. Most lender websites don't have detailed information about new build and sadly the staff at contact centres can often give incorrect information.
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Anonymous | 14 Nov 2011 11:15 am
I have just bought a Taylor Wimpey home and although they wanted their mortgage advisor to do a quick fact fie with me they were fine with me going to my own IFA which i have done with no problems
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terry | 14 Nov 2011 11:15 am
This is nothing new. I have been in the industry for 20+ years and builders plus estate agents have always used excuses to drive a purchaser to their brokers or solicitors, to the extent of telling clients cetaine incentives are not available unless their in house brokers or solicitors are used. Its all a matter of control and usig prc fees and solicitors referal fees to off set the cost of incentives.
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ben | 14 Nov 2011 1:34 pm
It should be the buyers choice and if they have confidence in a broker they have used in the past or someone that was recommended to them via a friend or relative then the developers should in theory respect that.
I accept that some brokers are better than others. However, when it comes to my clients I will always make sure that if I have any doubt about being able to help I will either say so to them or do more research to make sure that I am certain that I can help.
Ultimately being self employed I fight for every case and rarely if ever loose. If a developer is shortsighted enough to turn a buyer away just because they will not get a couple of hundred pounds as a kickback then its really bad judgement on their behalf and their loss.
Its dog eat dog out here and I take no prisoners.
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John Steel | 14 Nov 2011 2:04 pm
I have recently been involved with helping my own daughter to buy her first house using the scheme. The individual broker quickly backed off when she realised who I was, but this did not go down well with the developer, and the brokers were definitely steering the clients away from cheaper mortgage alternatives which might have been more problematic for the developer in terms of attitude to valuations etc
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