The new-build sector is again proving resilient to the political noise around Brexit and the enduring after-shocks of last June’s election, continuing to provide a strong sales book across most major housebuilders through the summer months.
This is good news for advisers linked to developers, national or regional, because this market has the clear edge when it comes to desirability and affordability, the quality and efficiency of the build of modern homes, and the continued availability of the Government’s Help to Buy scheme.
With autumn firmly landed, we must hope the market doesn’t empathise with the American description of the season: ‘the Fall’. There is little doubt the remainder of this year will see more unwanted headlines on both the Brexit and political fronts, and in November the Chancellor will deliver his annual Budget for the new fiscal year, rather than in March as previously. With the economy showing signs of stalling, he will have a clear view of the action needed to stimulate investment and meet the increasing financial needs of our public services, so we may see some tax pain for the consumer as Philip Hammond sets out next year’s revenue arrangements.
It is therefore encouraging to look at the new-build construction picture and see the annual dwelling starts in England totalling 164,960 in the year to June 2017, up by 13 per cent on the year before. During the same period, completions totalled 153,330, an increase of 11 per cent on last year.
Looking at Help to Buy, if figures from our own firms over the summer are an indication of the overall sector, the scheme continues to prove popular: our equity loan applications in August were 5 per cent higher than in the same month last year.
I have mentioned previously that the Government is reviewing Help to Buy. As I write this in September, we still await the Conservatives’ thinking although we may hear more from the housing minister, possibly at the HBF Conference or the Conservative Party Conference, both due in early October.
Should the Government move to change the parameters of the scheme, particularly the high ceiling of £600,000 across all parts of England, I must make a plea on behalf of homemovers: that they don’t get lost in this review.
Nineteen per cent of all equity loan sales are made to this group, with the average purchase price over £300,000 and more than half of purchases for detached houses. The price differential between a terraced or semi-detached property and a detached home is such that movers also need support if they are to move up the housing ladder as their family grows.
In September the consultation closed on a paper issued by the Department for Communities & Local Government in July — ‘Tackling unfair practices in the leasehold market’ — in response to a variety of practices in new-build where some new sites offered houses on a leasehold basis, not freehold, and for no apparent reason. Although the paper is looking to address the issue of leasehold tenure across new-build, it made this proposal regarding the Help to Buy scheme in paragraph 3.16: ‘We propose to remove as far as possible Help to Buy Equity Loan support on new-build houses where these are sold as leasehold.’ We await the secretary of state’s pronouncement with interest.
So, as the year runs to a conclusion, we can expect our sector to continue making the news, not always for the right reasons, receiving the focus of the political parties in conference season as a reflection of public anxiety over housing shortages.
But it’s also a time to reflect on where the sector is going, with the implications of Brexit on developers’ capacity to increase their build levels, the need to increase the supply of shared ownership as a more mainstream affordable tenure, the heavy reliance on government support to sustain demand for new-builds — and why, after five successful selling years, some developers chose to bite the very hand that was feeding them.
James Chidgey is new homes relationship manager at Mortgage Advice Bureau