Since Legal & General launched its New Build Club in January
2014, we've engaged with key stakeholders across the sector,
working with builders, housing associations, lenders, surveyors,
mortgage brokers, mortgage trade bodies and the Home Builders
Federation, with the aim of creating a more sustainable new build
mortgage market. In the last two years we've seen this market go
from strength to strength, as more lenders take advantage of
Government home ownership schemes and new build properties.
Previously the market was characterised by a
lack of competition amongst lenders and limited product innovation.
Lending was mostly limited to the High Street providers, and even
then many lacked specialist support such as a dedicated new build
desk. Ultimately, this left those who failed to meet their lending
criteria out in the cold.
Now, the market is increasingly complex and competitive, thanks
in part to a plethora of Government initiatives and an increasing
focus on housebuilding from politicians. Construction numbers
across Great Britain are currently in the region of 170,000 homes
per annum; however research suggests that in order to meet demand
and tackle increasing house price inflation we need to build in the
region of 300,000 homes per annum. It is too early to understand
all the implications of the Brexit vote for house builders.
However, it is clear that after decades of undersupply the
fundamentals of the market remain the same, we face an acute
housing crisis and demand for new homes will remain high.
We estimate the current value of the intermediary market for new
build now sits at roughly £18bn, this has incentivised lenders to
improve their propositions for the market however, more can always
Several lenders are now including extended mortgage offer
periods, increasing loan to value limits and accepting builder
incentives. There is also improved systems and support which
accelerates the mortgage process. Greater participation in the
Government's Help to Buy scheme has also been encouraged, with 18
lenders reporting Help to Buy completions in December 2015, and
some launching products in line with the initiative.
We're also seeing more lenders including Santander, Barclays,
NatWest, Virgin Money, Leeds, Skipton and TSB, embracing the new
build market and providing a strong boost. Meanwhile, specialist
lenders such as Aldermore and Precise Mortgages, are disrupting the
market by catering to borrowers who would fail to meet the criteria
of High Street lenders.
Growing competition is encouraging more lenders to seriously
consider the new build sector, allowing increasing numbers of
borrowers to secure a mortgage. Legal & General has grown its
share of the market substantially since 2014. By working closely
with lenders and brokers, our business saw new build completions of
£4.1bn in 2015, up by 51% on the previous year.
However, whilst we welcome this growth, the
abundance of Government home ownership schemes makes the new build
market far more complex. To help advisers with this task, Legal
& General has created a Government Schemes Matrix, providing an
overview of the schemes and the participating lenders. It's crucial
that borrowers' decisions are not only driven by sentiment, or the
charm of a shiny new home, but by the valuable advice of a
specialist new build broker.
Craig Hall, New Build Manager, Legal