The UK’s New Build sector stands at the forefront of innovation and adaptation, reflecting the ever-changing landscape of the housing market.
The UK is marked by a persistent shortage of housing supply, the opportunity for brokers to focus on the New Build sector cannot be overstated. As demand for homes continues to outpace availability, the construction of new homes remains a constant necessity. Driven by shifting demographics and evolving consumer preferences, developers and lenders are navigating new pathways to meet the needs of homebuyers. Broker firms stand poised to not only meet this demand but also establish themselves as indispensable advisers within the sector.
Market challenges
The market continues to face challenges including declining home ownership, dwindling supply, falling levels of planning permissions being granted and the frequent changes of housing ministers, but we are seeing gradual improvement in a number of areas.
Despite the above, we could see a more optimistic 2024 as UK Mortgage approvals have increased month on month since September 2023. Pressure on household finances has eased slightly with the positive direction of travel over the last 12 months with inflation and mortgage rates. In addition, as sellers get more realistic on asking price – the tide on consumer sentiment should slowly start to change and hopefully gain momentum as we move through 2024. There are other reasons to be positive, in November 2023 the House Builders Federation (HBF) released their 10-point plan of practical solutions for government to remove barriers to house building and with the general election looming, the opposition have pledged to re-instate mandatory housing targets should they get into power.
Emerging trends, innovative products and collaboration
Noticeable shifts in New Build buyer preferences are becoming evident. Post Help to Buy there’s been a resurgence in the appeal of smaller two-bedroom starter homes, particularly flats. The collaboration within the industry to launch the deposit unlock scheme was impressive and more recently in December 2023 Skipton launched up to 95% LTV on New Build flats, without using any 3rd party.
Alongside this trend, there’s a growing interest in affordable housing schemes. There are multiple developers looking at launching their own Shared Equity adaptations and Private Shared Ownership schemes are starting to emerge. In addition to this, you have the mortgage guarantee scheme, First Homes and Rent to Buy. It’s clear the market’s not standing still and is taking an active approach.
When considering individuals seeking access to the mortgage market, it’s crucial to recognise that it extends beyond younger generations to include those relocating to the UK. In 2022, international immigration reached a record high, with 1.2 million people moving to the UK on a long-term basis. Skipton stands out as one of the limited lenders offering mortgages to foreign nationals up to 90% loan-to-value including on New Build properties.
Additionally, there's the uptick in the support provided by the “bank of mum and dad”, as families step in to assist with deposits and overall affordability concerns using lender Income Booster (also known as Joint Borrower Sole Proprietor or JBSP) propositions.
Finally, what about the under-served customer demographics within society? The people who don’t have a “bank of mum and dad”. Well, there’s Skipton’s innovative Track Record proposition, which is aimed at renters. We offer up to 100% LTV on New Build houses if the applicant meets our criteria, affordability and credit scoring.
Pioneering energy efficiency
Newly-built homes stand as a beacon of energy efficiency, with 85% having an A or B EPC rating and consuming 55% less energy on average. This aligns seamlessly with the growing trend among homebuyers towards prioritising energy-efficient properties, according to Zoopla research, which looked at how important the energy rating of a property is when buying a New Build home, 44% said it was very important and 25% said it was extremely important. Moreover, newly-constructed houses can serve as a blueprint for retrofitting existing housing stock across the country, leveraging modern design techniques, advanced technology and sustainable practices to pave the way forwards for a more sustainable future.
These trends reflect a dynamic shift in the housing market, shaping the choices and strategies of buyers in today’s landscape. There are also evident opportunities for the industry to gain insights from the New Build sector and for brokers to capitalise on them.
At Skipton, we remain committed to supporting the New Build market and advocating homeownership, with 15% of our completions in 2023 being on a New Build property and 56% of New Build completions advanced to a First Time Buyer.
Find out more about Skipton’s New Build proposition.