Opening the 'closed shop' of new-build advice

In a flagrant attempt to secure a greater number of ‘clicks’ for this article, may I be the first conveyancing distributor to congratulate Prince Harry on his engagement to...

Related topics:  Finance News
Harpal Singh
1st December 2017
Harpal Singh, Broker Conveyancing
"To say there is something of a ‘closed shop’ around the provision of mortgage/legal advice to new-build customers, might be something of an understatement."

Actually I can’t do it. I was thinking about how I might open this piece with perhaps the most tenuous link between next year’s Royal nuptials (yawn) and conveyancing, and that really is the best I can come up with. Let’s be honest the chances of the pair of them needing either mortgage advice and/or the services of a quality conveyancer through the UK’s best conveyancing distributor are slim to say the least. Perhaps if Republic gets its way in the future, but I’m not holding my breath on that one anytime soon.

Which really leaves me with the other ‘big’ news story of this month and that’s the Budget. Now I appreciate you might feel the Budget has been done to death by all and sundry – and you’d be right – but where might it fit in with the provision of mortgage advice, and subsequently your ability to provide conveyancing recommendations to your clientele?

Well, the good news – and yes there is some – is that the housing market as a political issue is (with the exception of Brexit) looking like it’s going to be one of the main priorities for this Government over the course of the next four years. We’ve said it before but when you’re in a minority Government position, you need to find issues that have some degree of cross-party support – and in the case of the Conservatives intra-party support as well – and therefore ‘fixing the UK’s housing market’ seems about an good an issue as any.

Thus we had the range of measures announced during the Budget, and a very vocal commitment to the cause from the Prime Minister herself. It’s her ‘personal mission’ after all. Clearly many of the measures are aimed at helping first-timers on to the market but greater levels of supply will not just mean more homes for first-time buyers to choose from, especially if (as seems likely) they’re not really in a particularly improved position to buy anyway.

Indeed, it may be those who are further up the ladder who benefit the most – even from those first-time buyer focused stamp duty changes – because as the analysis seems to show, house prices are likely to get a boost from them, which (somewhat ironically) might put homes further out of reach for the newbies. You give with one hand and take away with the other.

However, if the stamp duty changes do play out as the OBR anticipates then we’re looking at higher-valued homes and (potentially) greater levels of equity for your second stepper clients and beyond, plus of course – if the Government is true to its word – more new homes to choose from.

Therefore, from an advisory point of view, with new-build activity already surpassing the 200k mark for the first time in decades, and with ambitions to push this up to 300k, might this not be a good time to up the ante in terms of your new-build mortgage advice proposition. And, by the same token, to ensure that you are making the most of these clients and all their other diversified advice needs, whether that be protection, GI, conveyancing, and the like.

Now, in that respect, I appreciate it’s perhaps easier said than done, because to say there is something of a ‘closed shop’ around the provision of mortgage/legal advice to new-build customers, might be something of an understatement. Indeed, from the anecdotal evidence I’ve been provided with, it may actually suit the Government – as perhaps part of its ‘Call for Evidence’ on the home-buying process – to look into the practices of the big housebuilders/developers when it comes to ‘cajoling’ clients to take on the services of their affiliated mortgage advisers and law firms. Let’s just say that when big cashback/money off incentives are offered, it’s perhaps no surprise that clients feel they have to go with the developer’s recommendation rather than firm(s) of their own choosing.

However, the more advisers that make a ‘song and dance’ about such practices the better, and it should hopefully follow that such ‘closed shops’ may be forced to open up, leaving the way open for all types of firms to provide advice and recommendations to new-build purchasers. Perhaps a point that this housing market-focused Government may like to address as it seeks to get the number of purchases up in the years ahead. Certainly, when it comes to mortgage advice, far better to have the market open to all firms, rather than just the handful that appear to dominate – at the developers’ behest – right now.

So, let’s look at the positives on this one. If the Government measures can deliver greater levels of activity, if the housing market fix can come sooner rather than later, then this should be a positive for advisers, providing they can get their advice propositions across to the new-build buyers. There’s always a catch somewhere.

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