New build enters a new era

The UK housing sector is undergoing a significant transformation in 2025, driven by ambitious government targets, innovative technologies such as modular construction, and shifting societal expectations for affordable, energy-efficient homes with robust infrastructure that align with modern lifestyles.

1. Government policy and housing targets

In response to the UK housing crisis inherited from the previous government, Labour has committed to constructing 1.5 million homes in England over the next five years, equating to 300,000 homes annually, which is a level not consistently achieved since the 1960s. 

However, 2024/25 data shows a decline, with only 201,000 homes receiving their first Energy Performance Certificate (EPC), down 8% from the previous year. This shortfall, coupled with high interest rates and build costs, creates a complex environment for lenders.

The government’s bold target has been met with some scepticism, but they do appear to have housing at the forefront of its agenda and has introduced several initiatives to “get Britain building again”.

- Planning reforms: The National Planning Policy Framework has been overhauled to streamline processes, reducing the number of public agencies consulted on developments during the planning phase. Additionally, the government has introduced a new AI-powered tool to assist local councils in processing planning applications faster, addressing delays that have historically stalled projects.

- National Housing Bank: A £16 billion initiative that aims to support development, complemented by £39 billion funding for affordable housing over the next decade, expanding options for first-time buyers and low-income clients.

- Brownfield-first approach: Emphasizing development on previously used land, particularly in urban areas. This approach leverages existing infrastructure, such as transport links and utilities, to support sustainable growth and reduce the ecological footprint of new housing projects. 

Despite these efforts, some local authorities do face challenges, and some councils are struggling to balance government mandates with local realities, such as planning bottlenecks or insufficient infrastructure funding. For mortgage advisors and brokers, closely monitoring local housing targets is critical to anticipate market shifts. Understanding these dynamics allows advisors to identify regions where new build supply is likely to increase.

2. Affordable housing and buying schemes

Affordable housing remains a cornerstone of the government’s strategy, with Homes England reporting 38,308 housing starts and 36,872 completions between April 2024 and March 2025. Of these, 79% of starts and 77% of completions were affordable homes, driven by the maturing Affordable Homes Programme (2021-2026).

However, starts for intermediate affordable housing (e.g., shared ownership) fell by 27% reflecting financial pressures on housing associations due to rising build costs and maintenance demands.

There are a number of buying schemes that continue to facilitate access to new builds. 

- Deposit Unlock: This enables clients to purchase new builds up to £750,000 with a 5% deposit, reducing upfront costs but requiring careful affordability assessments due to higher loan-to-value ratios.
- Own New Rate Reducer: Offers mortgages from 1% for new builds, lowering monthly repayments
- Shared ownership: Enables buyers to purchase a share of the property while renting the remainder.
- Help to Build: Supports custom and self-build homes with equity loans, requiring advisors to navigate unique financing structures.

Advisers should guide clients through these schemes, explaining eligibility, long-term costs, and risks.

3. Energy efficiency and client appeal 

New build homes are increasingly attractive to clients due to their energy efficiency, which directly impacts affordability. In 2025, 99% of new homes achieve an EPC rating of B or above, compared to D for older properties. Features like heat pumps, solar panels, and smart meters reduce running costs, offering homeowners significant savings of around £979 on their annual bills, which is especially appealing when living costs are still volatile.

How does this translate to mortgage advisers?

- Lower living costs: New build properties are commanding a higher price than they used to, and that can be a stumbling block for some first-time buyers, however, highlighting that energy savings can justify higher purchase prices, especially for clients struggling with affordability, can often help to overcome this. 

- Lender preferences: Some lenders offer green mortgages with lower rates for energy-efficient homes, which advisers should explore to secure better terms.

- Regulatory awareness: From April 2025, heat network regulations and Energy Ombudsman membership for housing associations with communal boilers may affect property management costs, which advisers should factor into affordability calculations.

Advisers should educate clients on these benefits and collaborate with lenders to identify products tailored to energy-efficient new builds, enhancing client purchasing power.

4. Community infrastructure and buyer confidence 

The liveability of new build developments can often come into question, particularly infrastructure like schools, shops and transport links. Issues where promised amenities were delayed highlight risks that can erode buyer confidence. The government aims to address this by requiring developers to commit to infrastructure timelines before planning approval. 

To put clients' minds at ease, advisers should:

- Research developments to confirm infrastructure delivery, reassuring clients about long-term value. 
- Highlight placemaking efforts such as Redrow’s Connigbrook development in Kent, which includes wetlands and green spaces, enhancing appeal for families. 
- Advise clients on potential resale value, as well-located developments with robust infrastructure are more likely to appreciate. 

5. Market challenges and economic factors

Mortgage advisers face a challenging market in 2025 with high interest rates and a cost-of-living crisis limiting the borrowing capacity of many new buyers. According to Zoopla, 43% of new build buyers are citing affordability as a barrier.

Also, a record low in planning permissions in 2024 reduces new build supply, which can potentially increase prices in high-demand areas. According to the Home Builders Federation (HBF) Housing Pipeline Report, only 242,610 housing units received planning permission in 2024, marking a 2% decrease from 2023 and a 26% drop from the 2019 peak, the lowest annual total since 2014.

Mortgage rates also remain elevated, impacting debt-to-income ratios. Advisers must look to explore fixed rate options or schemes like Own New to mitigate client exposure.

Opportunities exist in leveraging government-backed schemes and advising on shared ownership or Deposit Unlock to help clients enter the market. Brokers should also monitor lenders’ criteria for new builds, as some impose stricter loan-to-value limits due to perceived risks.

6. Practical strategies for mortgage advisers 

- Build developer relationships: Stay informed about new projects and incentives, streamlining client referrals

- Upskill in scheme knowledge: Attend webinars or training from Homes England or the National Housing Federation to master schemes like shared ownership and Help to Build.

- Use technology: Leverage digital tools to compare mortgage products and assess client affordability, incorporating energy savings into calculations.

- Educate clients: Clearly explain scheme benefits and risks, ensuring clients understand long-term commitments like rent payments in shared ownership.

- Monitor market data: Track housing statistics (e.g., GOV.UK releases in November/December 2025) to anticipate supply trends and advise clients on timing purchases.

Of course, not all buyers are equal and many will do better using products that offer higher LTV lending for lower deposits. Our own 3 and Easy mortgage range is designed to help long-term renters and first time buyers get a foot on the property ladder and begin to move up the chain. New build is set to become a very important market in the UK and understanding the options available to buyers will be crucial over the coming months.