Housing Watch: Flying start for new-build in 2017


With everything to gain from further success in new-build, key stakeholders must continue to work closely together

Returning to work after the New Year, we soon discovered that officials at the Department for Communities & Local Government had been in the office over Christmas, surviving on cold turkey and putting together more announcements to boost the UK’s housing supply.

News gushed forth on starter homes, garden villages and garden towns, all suggesting there was to be no let-up under the Theresa May administration in getting Britain building.

Alongside the continued popularity of the Help to Buy equity loan scheme, I expect another good year for advisers specialising in the new-build and affordable housing sectors.

It was good to hear that starter homes in England will finally get going, with local authorities having already successfully bid for some of the £1.2bn made available to fund clearance and preparation of sites for these homes.

Thirty authorities have work under way and these pre-prepared sites (many of which will appeal to SME developers rather than national housebuilders owing to their smaller acreages) will come on stream later this year.

So far we know that the previous tenets of the scheme – available only to first-time buyers under the age of 40 – remain in place. Until the Government’s housing white paper is published, little more will be known about the covenants surrounding the discount of 20 per cent of market value and the number of years this will taper to.

Meeting targets

Before Christmas, the Home Builders Federation put greater perspective on the new-homes target set out by the Conservative government back in 2015.

To achieve the “one million homes in this parliament” pledge, output needs to average 200,000 homes a year. The net additions figure of 189,650 (of which 163,940 were new-builds) effectively covers the first year of the parliament to April 2016 and shows that “recent increases in housing delivery have been sustained and built on, with all indicators suggesting that further increases will occur”. This is more good news for our sector.

We have, of course, lost the Help to Buy mortgage guarantee scheme, which meant there were 95 per cent loan-to-value products available on new-build houses and flats. While affordability at 95 per cent may be difficult for many, the loss of the scheme is troubling.

A review we undertook earlier this month of lenders with a new-build profile shows just five offering 95 per cent LTVs on new-build. This consists of one high-street bank, one challenger bank and three smaller building societies, one of which restricts it to their local region while the other two do not consider flats at all.

The situation improves at 90 per cent LTV, with 10 new-build lenders. All bar one are from the building society sector, although only three will consider flats at this LTV. Without such support, the new-build non-scheme market still appears very rooted at the 85 per cent LTV level.

With everything to gain from further success in new-build, it is important that the key stakeholders continue to work closely together to maintain the trust and understanding that has built up over the past five years.

With this in mind, it was concerning to hear the housing minister give a warning to housebuilders in a special debate in Parliament last month regarding the increased use of leaseholds in selling new houses for no obvious reason. We will watch this issue closely over the coming months.

James Chidgey is new homes relationship manager at the Mortgage Advice Bureau