With a Brexit predicted to exacerbate the shortage of skilled labour, new-build mortgage advisers face no let-up in pace
Although winter seems firmly behind us and Easter arrived well before April, it feels like mortgage advisers have not drawn breath in new-build since last year’s summer holidays.
Housebuilders have been at full speed with their new-build construction sites all over the country, as anyone driving around the regions of Britain will notice. These are often multiplesites on the edges of towns and cities, from Plymouth up to Glasgow and beyond.
So when the Department for Communities and Local Government recently published the Q4 2015 results for the Help to Buy Equity Loan scheme, it was no surprise to discover just how significant this scheme is to the new-build sector.
The report showed that, in the 33 months since its launch in 2013, the scheme has assisted the completion of almost 74,000 newly built homes. The total value of the equity loans stands at£3.2bn, which of course is funded by the Government, and the total value of the properties sold under the scheme is £16.3bn.
Impact of Help to Buy
In my discussions with housebuilders, it has been clear that up to half of all new-build sales have been assisted by the Help to Buy scheme, with 81 per cent of purchases under the scheme made by first-time buyers.
Comparing the figures for 2015 with those of 2014, Help to Buy equity loan completions increased by 10 per cent with just over 3,000 more sales in 2015, as the increased promotion of the scheme saw major housebuilders expand their capacity to build.
Q4 2015 had the most new-build completions of any quarter since the start of Help to Buy, at 10,564 – a 29 per cent increase over the same quarter in 2014. However, the sales curve seems to be starting to plateau, not for want of demand but more for want of builders’ capacity to build.
Just as the mortgage market suffers from the lack of trained advisers and qualified surveyors, housebuilders too have shortages of skilled workers and have had to look to the European labour market to continue to meet their build plans at the current level. In recent days this has been put into sharp focus by two respected economic analysts in reviewing Britain’s future outside the EU.
According to Capital Economics, a Brexit “would hit housebuilding hard”. It says: “With the latest Home Builders Federation data reporting that 41 per cent and 32 per cent of housebuilders consider labour availability and costs respectively to be constraints on production, a shortage of workers has been holding back housing starts.”
The consultancy says around 12 per cent of construction workers in the UK were born abroad and it predicts that training a new wave of British workers would take years. This view is echoed by Goldman Sachs, which says companies most exposed to the domestic UK economy, such as major housebuilders, would be most affected by a Brexit.
Whatever the outcome of the referendum in June on the UK’s membership of the EU, the uncertainty created ahead of it will inevitably impact on builders’ investment plans for later this year and beyond. It is also something for all new-build mortgage firms to be aware of when planning their own activity in the sector this year.
Andy Frankish is new homes director at Mortgage Advice Bureau