Pain relief

No-one can deny the house building sector is in a sickly state and the government is pinning its hopes on a combination of remedies to cure it

NewBuy is final piece of the jigsaw

Nigel Stockton
financial services director

With house sales 600,000 down on the long-term average, the new-build marketplace is outgrowing the prime market and this trend is expected to continue. Recent, relatively positive financial results from large house builders such as Bovis, Taylor Wimpey, Persimmon and Barratt Homes would support the view that the market has bottomed with many builders planning to build more units and increase volume, albeit from the lowest base post-World War II and not at the level that the government needs.

So what does this mean for the mortgage market? The opportunities will be there for specialist brokers to increase their market share.

House builders can be demanding clients, requiring weekend working, long helpline hours and prompt turnarounds. Exchanges within 28 days are a minimum requirement, so brokers and lenders not used to this environment could find this challenging.

Builders also need need on-site brokers and are usually not satisfied with just telephone sales.

Specialist knowledge is vital and this market doesn’t appeal to a broad church. Gaining knowledge in shared equity, shared ownership, FirstBuy and NewBuy is not easy – it needs investment and most important, experience.

The new-build sector is dominated by four core lenders – Halifax, which we believe has at least a 30% share, the Royal Bank of Scotland, Nationwide and Santander.

The lenders also have specialist resources, with Halifax leading with its long-established new-build team. Headed by Douglas Cochrane, the team has links to the National House Building Council and Home Builders Federation.

Interestingly, Nationwide plans to follow suit, with James Chidgey, senior manager of corporate accounts at Nationwide, to lead the charge from June.

On that note, Nationwide should not be discounted now that its policy for valuations of new-build has moved. It has always had good products and volumes are now coming through.

We also believe that NewBuy, although not providing the government’s requirement of 30,000 units per year, will provide a fillip to the new-build arena.