3 things to consider when advising on new build
February 2023
New build properties are often seen as the lifeblood of the housing market and a popular choice across all client types. In 2022, 1 in 6 houses purchased were new build1. They provide an opportunity for many young people to purchase their first home, are usually more energy efficient than older properties, located in the areas most in need of new housing stock and conveniently could offer buyers a no-chain option.
But advising on new builds comes with a new set of challenges and additional complexities for brokers. Successfully navigating them and gaining knowledge of the new build landscape is crucial to meeting the needs of your clients today and in the future.
Offer Validity
A common problem with new build cases can be managing completion delays. This means that brokers should look at lenders with flexible extension processes and periods.
Most lenders have a 12 month offer period. However, you will need to apply for an extension of the offer period after the first six or nine months to benefit from the total 12 months. To manage completion delays effectively it’s important to consider what stage of build your client’s property is in, as it may influence the lenders you choose.
Incentives
Many new build applications also include financial and non-financial incentives, from builders’ deposits and cashback to non-financial incentives such as kitchen upgrades and fitted appliances. Different levels of incentives are accepted by each lender, and it is important to discuss this with your client to find a lender that works for them. For first time buyers these incentives may be particularly important, as their finances are typically under the most strain when purchasing a first home.
Service offering
In some new build cases it may be necessary to engage with lenders directly in addition to using sourcing systems. Lenders with a dedicated new build support team can provide expert guidance meaning you’ll get the answers you need promptly.
Likewise, the challenging timescales associated with new build may require a broker to prioritise lenders with a proven track record of delivering consistently high service levels. This will make sure the application can complete in the necessary timeframe.
And as with any mortgage application, it’s important to consider your clients’ specific circumstances, such as general financial situation and long-term goals. By taking into account all these factors you can ensure the best possible outcome for your client.
Finding the right lender
At Coventry for intermediaries, our new build proposition is designed with both brokers and clients in mind. We have a range of residential products up to 90% LTV and buy to let solutions to 75% LTV, as well as the flexibility to accept builders’ financial incentives up to 10% of the purchase price, from cashback to contributions towards stamp duty costs.
Whether it’s the impact of rising energy bills, impending Buy to Let regulation or simply a drive to finding more eco-friendly properties, new build homes are a growing choice for clients, from first time buyers to landlords. For brokers, it’s never been more important to have a holistic view of the new build landscape. Now is the perfect time to start building up your knowledge of this market, so that you can give your clients the best possible advice and match them with the right lenders to help them secure a new build property.
1 UK Finance, New build and second-hand dwelling purchases for new regulated mortgages, UK January 2022 – November 2022
