Insights

5 Ways to get into the New Build Sector

Mortgages 3 min read 15/01/2024

The new build sector is often thought of as the engine of the housing market. We can’t build homes fast enough to meet demand, despite the government investing billions into homebuilding and affordable home ownership in the last decade. This means homebuilding will remain a political priority over the coming decade and beyond, especially as the UK gears up to meet its 2050 net zero target.

 

The green revolution

New builds are leading the way as the housing market shifts towards sustainability. They’re already more energy efficient than older homes and the Future Homes Standard will make them even greener from 2025. Homebuyers who want a green home will increasingly consider a newly built one, both to keep their energy bills as low as possible and to futureproof against retrofitting costs. By deepening your knowledge of the new build mortgage market and how it supports the green housing revolution, you can be ready to help more of your clients.

 

First steps

We know the new build sector can sometimes feel like a closed shop. Some larger developers have well-established referral relationships with new build specialist brokers, and it might feel difficult to break into the market, but you can still carve out a niche for yourself and put your business in a better position for the future.

Construction crane

Here’s how to start:

 

1. Research the new build process

Buying a new build is different from purchasing an existing home. For starters, the sale is chain free, but the developer might require exchange of contracts within 28 days, so these mortgage cases can be hugely time sensitive. Think carefully about lender timescales when advising your client. When you factor in the fact that they’re more likely to be using a homeownership scheme, your pool of potential lenders becomes even more limited. Plus, while the clock is ticking on many new build cases, others can take longer than expected, especially if bought off-plan. Construction delays could mean the mortgage offer runs out before completion, so you need to request an extension or source a brand-new deal. Make sure you fully understand how different the purchase process is and how to help it run smoothly.

 

2. Look for specialist new build lenders

Some lenders limit maximum LTVs on new build, while others exclude specific types of properties or don’t support all homeownership schemes, so you need to research criteria carefully. Then be mindful that processing timescales and expertise in this sector varies enormously between lenders. Speak to other brokers about their real-life experiences to really get the inside track.

 

3. Be flexible

New build properties are often viewed and reserved at the weekend, and this means the clock could start ticking on a Sunday morning to exchange of contracts within 28 days. Every day counts to get the mortgage over the line, plus the developer might want assurance that the buyer can afford the property at the time of reservation.

That’s why it’s common for new build brokers to be available at weekends to get the ball rolling on a time-sensitive mortgage. You may need to be flexible if you want to grow this part of your business.

 

4. Get to know the government schemes

There’s a raft of homeownership schemes; many of which are exclusive to the new build sector, or to first-time buyers, or both. It makes sense to get your head around each of them and what they offer. The government website has information on each of the schemes listed below:

When you’ve understood the basics in theory talk to other brokers for the lowdown on how they work in practice. They’ll be able to share what differences they found in the mortgage and homebuying process. 

 

5. Build your property network

Speak to smaller builders in your local area to glean as much information about how they work and future builds. Local estate agents can also be invaluable contacts as they know about new developments before they are built. It’s also worth forging relationships with your local housing associations, as they’ll be involved in new build developments too. Each of these will be a useful source of knowledge about the market, the new build process and any pitfalls you need to know about, as well as potentially being able to refer clients to you.

The new build sector is certainly complex but it’s brimming with opportunity for brokers, so it’s worth investing the time to really understand this part of the mortgage market.

Boosting your knowledge means you can help more of your clients and grow your business.

 

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