Connells boss says record new homes sales set to continue

May 13, 2021 / Isla MacFarlane
Connells boss says record new homes sales set to continue

Record new home sales as Connells Group looks set to continue well into 2021, writes Roger Barrett, Connells Group Land & New Homes Managing Director.

Well, what a first four months it has been for the new homes industry with developers working flat out to make up the lost production across 2020, and in order to take advantage of the unprecedented demand that we have seen from buyers for all new home property types across the UK. With supply chains still in ‘catch up’ mode, and emerging shortages in second hand stock, it seems inevitable that the recent significant increases in house prices will continue into the future, particularly affecting first-time buyers and their ability to get on the first rung of the housing ladder.

Since the start of the year we have seen unprecedented demand for new homes and are now on track to sell well in excess of 12,000 new homes in 2021. This will be an all-time record for any single group estate agency operation, and following the recent acquisition of Countrywide which sees Connells Group now operate across 1,200 UK offices, incorporating a large Land and New Homes operation that is unrivalled within the estate agency and residential sector.

In addition to this, the support services offered to housing developers and registered providers as part of the home buying process are an integral part of our service offering, and again we are looking to build upon all previous records by writing in excess of 15,500 new build mortgage applications and also 11,200 part-exchanges that our subsidiary and new homes mortgage broker specialist The New Homes Group manage for our developer clients.

Whilst this is tremendous news for housebuilders, the question on everyone’s lips, however, is can these levels of activity be maintained? Here at Connells Group, the answer for us is a definite ‘yes’.

Why do we say that?

Firstly, measures put in place by the Chancellor to restart and stimulate the housing market are still very much in play. These include the transition to the new Help to Buy (HTB) scheme, albeit with restrictions that limit the scheme now to first-time buyers only and with regional price caps.

The stamp duty holiday, originally set to end on 30th March 2021, is now in place until 30th June for properties up to the value of £500,000. A tapering period will then come into place from 1st July to 30th September with the nil-rate band set for properties up to the value of £250,000. From 1st October, the stamp duty threshold will then drop back down to the normal rate of £125,000. This measure has had a considerable impact in increasing housing sale volumes.

Finally, general mortgage availability at competitive lending rates and the recent launch of the new government-backed scheme, which means more lenders are accepting borrowers with just a 5% deposit. This does, however, come at a time when house prices reach record highs – and with new build premiums present across the country – forcing new buyers to take an even bigger step to reach the first rung on the property ladder.

Working closely with The New Homes Group, we are alive to the fact there is a gap in the mortgage market for those new build purchases that have a small deposit but do not fit the new HTB scheme – all but one high street lenders remain at 85% LTV for new build properties with the exception being at 90% – so it would be good to see a medium to long-term solution for this and especially with the current HTB scheme end date of March 2023.

There are, however, a number of other excellent solutions on the horizon, with lenders looking at innovative ways of providing high LTV new build mortgages. One of those is ‘Deposit Unlock’, where the Home Builders Federation and its members have teamed up with insurance broker Gallagher to develop an innovative new mortgage indemnity scheme. The scheme seeks to ensure competitively-priced high LTV mortgages are available in the market and it is hoped the initial pilot will go live within weeks whilst discussions are ongoing with a range of lenders.

There is also the government’s commitment to the First Homes scheme coming soon, and aiming to make more new homes available at a discount to local people who may otherwise struggle to buy. A ‘First Home’ will be sold at 30% below market price in perpetuity, although local authorities can choose to set the discount at 40% or 50%.

All in all, the future looks bright in the new homes market, and the range of services provided by Connells Group all ‘under one roof’ – everything from sourcing residential development land and the sales and marketing of new homes to mortgage provision for prospective purchaser and property management – will certainly be key to developers and affordable housing providers success this year.

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