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Diversity is key for the new build market

Prior to Legal & General New Build Club launching into the market three years ago, the industry was dominated by just two lenders. 

These two lenders had a 65-70% combined market share, which has thankfully now been reduced to 40%. This has been an important shift, as diversification will be key to creating an inclusive New Build market, which in turn will enable the market to reach its full potential and hit house building targets.

Put simply, the only way that we are going to be able to deliver on the Government's house building promises is with an effective and well-functioning new build sector. At the moment, 50% of new homes are being built by 10 large companies. This domination and exclusivity is contributing to stagnant construction rates. Breaking down this oligopoly and getting the support of the Custom and Self-Build market is paramount if we are to achieve the Government's ambitious target of building one million affordable homes by 2020.

It was encouraging to see the Government announce its support for SME house builders in its Housing White Paper earlier this year. Small independent builders have previously found it hard to enter the new build market, so hopefully this change will open up the sector to a greater number of developers. Legal & General has recently invested in a factory near Leeds that will have the capability of producing 3,000-4,000 modular homes per year, supporting and contributing to the Government's house building targets.

Over the past couple of years, the New Build market has grown exponentially, with an increasing number of lenders willing to consider offering loans on this type of property. Since its launch, Legal & General New Build Club members have overseen £12bn in New Build lending. The market has gone from strength to strength, benefiting from improved policy and propositions, with extended offers, LTVs, builders' incentives, and improved service and support. It is also great to see an increase in lender participation in the Government's schemes to help improve housing affordability through shared ownership, First Buy, New Buy and more recently, the Help to Buy scheme.

Ultimately, if the Government is ever going to solve our chronic shortage of affordable homes, support for house building needs to occur across all tenures. We need to be building more homes for shared ownership and the private rental market, as well as for owner-occupiers. Unfortunately, over the past couple of years, the housing market has become increasingly exclusive, pricing many aspirational home-owners out. Moreover, the continual increase in house price inflation has resulted in the rise of "Generation Rent." It is therefore high time that the New Build market starts building homes for the majority, instead of solely meeting the needs of an exclusive few.

The New Build market offers the perfect opportunity to restructure our housing market once and for all. Once the Government starts to implement the promises made in its Housing White Paper, house builders, lenders and the Government can all work together to build the affordable homes our country needs. 

Craig Hall, New Build Manager at Legal & General Mortgage Club