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Housing Watch: A scheme worth holding on to

As Help to Buy enjoys record applications in Q1 2018, the government would do well to capitalise on the strength of the brand

James ChidgeyResidential development is subject to the vagaries of the weather and, while warmer temperatures thankfully now dominate, the new-build sector had a seasonal scare when the Beast from the East took hold in Q1.

The National House-Building Council’s recent analysis referred to anecdotal reports that up to 30 days were lost on site in February and March as a result of the Arctic  conditions.

Its figures revealed a slower start to 2018, with 36,637 new homes registered in the first three months of the year, compared with 42,405 last year: a decrease of 14 per cent.

However, this blip aside, the major national housebuilders saw their net private reservations per active outlet per average week climb over 0.8, from around half that figure at the launch of Help to Buy five years ago.

The number of active outlets also continues to increase, albeit marginally, despite many categorised as large sites, which goes to show that major private house builders are maxing out their build capacities while the selling climate remains robust.

This is further evidenced by our network producing a record number of new applications in Q1 for the Help to Buy scheme. That said, nervousness about the scheme’s future continues to persist given the high percentage of new-build sales reliant on its full availability.

Promising indications
Whether the recent role changes within the housing ministry have delayed announcements regarding the scheme post-2021 we do not know, but the industry is looking to James Brokenshire, the new secretary of state for housing, communities and local government, for some assurances.

The indications are promising that this flagship housing scheme will continue in some form or another. We know how successful completion numbers for this scheme have been, with the running total to December now standing at just shy of 159,000.

Completions in Q4 2017 were 13,937, a 14 per cent rise on the same quarter a year previous. The full-year completions of 46,237 show 2017 was the strongest yet.

One interesting point buried in the figures was that in Q4, for the first time since the scheme began, there was a fall in the average purchase price made by first-time buyers – down 1 per cent on Q3 to £274,170.

The cut to stamp duty in November may have played a small part but the Q1 figures, to be released later this summer, will tell us more.

In my article in the April issue, I talked about how more promotional activity using the Help to Buy brand could increase the public’s awareness and understanding of the shared ownership product, as it has done with the equity loan product.

Shared ownership has a stigma attached to it in parts of the country, so repositioning it could help relaunch a very good product for buyers. And do not be surprised to see the government make more use of the Help to Buy brand for other house-purchase schemes in the future, too.

Harmonious approach
Meanwhile, May saw the FCA publish its Mortgages Market Study Interim Report. It was pleasing to see it found “little evidence that commercial arrangements between lenders, intermediaries and other players in  the mortgage market currently lead to poor consumer outcomes”.

And in specific reference to the new-build sector, the FCA concluded that “lending on new-build properties is more concentrated than the wider residential market. But intermediary firms that have arrangements with developers do not sell more expensive mortgages than those intermediaries without them”.

We should take comfort in the fact that its interim findings support what we already know: that new-build advisers use their skills to secure the right mortgage in the most efficient way for the client, minimising the length of the application process and the days to obtain the offer, in order to meet the developer’s date for exchange of contracts.

This harmony of approach from lender, adviser and developer has the regulated advice process at its core. The sole objective is meeting the client’s desire to purchase their brand-new home and nothing else.

James Chidgey is new homes relationship manager at Mortgage Advice Bureau

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