Whatever the long post-Brexit summer brings, we need to maintain the strong momentum developed since 2013
As our attention turns to summer holidays, the new-build market can reflect on how it may be affected by the UK’s decision to leave the EU.
While in the long term there may be growth opportunities for the economy, in the short term housebuilders are keen to ensure buyer confidence is not dented by the gloomy headlines and political upheaval. Some will be reviewing their build plans over the coming weeks. As with severe winter weather, market turbulence is not good for the construction and sale of new homes.
It is a welcome relief to have a new government in place so that the market is not left to breed more uncertainty in a political vacuum until September, as originally envisaged following David Cameron’s resignation.
However, new Prime Minister Theresa May’s government shake-up means a change of faces in the housing ministry, which now includes Sajid Javid as new secretary of state for communities and local government, the department that directs housing and planning matters. New housing minister Gavin Barwell represents Croydon, part of high-rise urban London, so he knows all about the acute need for more new and affordable homes.
Commentators have not been slow to remark on the potential downturn in the economy and the effect this may have on buyer demand. But while a lot of talk has centred on the London impact, the overall situation in England, Wales and Scotland is less clear and is unlikely to be so until September data is in, given the usual lull during the summer months.
That said, housebuilders have been quick off the blocks and have already met with the new government team to confirm assurances given by its predecessor and ask for more stimuli to maintain current levels of construction.
HELP TO BUY SCHEME
The key plank of government support, the Help to Buy equity loan scheme, continues to attract buyers at a rate of almost 3,000 a month.
Since its launch in April 2013, the scheme has assisted in the sale of 81,000 newly built homes in England alone. Scotland and Wales have similar schemes, and more recently England’s was boosted by a specific London scheme, giving an equity loan of up to 40 per cent.
Housebuilders are assured these innovative schemes are set to continue.
Support for high-LTV lending is of continuing concern in a market where deposits are hard to raise and prices are out of sync with incomes. Exploring options to extend the Help to Buy mortgage guarantee scheme, due to close in December, would assist new-build, giving choice to the customer and stability to our market.
Housebuilder chiefs have also been vocal in their requests to drive the housing market forward, with one advocating the expansion in England of the 40 per cent Help to Buy London scheme on a temporary basis.
More requests that we support relate to stamp duty, particularly for first-time buyers. Average purchase values under the Help to Buy equity loan scheme are around £212,000, incurring an average SDLT of £1,750. This is paid on the purchase price, despite the fact the Government holds up to 20 per cent of equity at completion.
Whatever the long post-Brexit summer brings, we need to maintain the strong momentum developed since 2013. We will continue to support the Home Builders Federation and its members in identifying trends and factors that may be working against the market.
Andy Frankish is new homes director at Mortgage Advice Bureau