"The Government’s Housing White Paper last month does provide a range of measures that will collectively begin to address the gap between supply and demand."
FR: L&G’s New Build Club is celebrating its third anniversary this year – what changes have you seen in the market during this period?
Since joining the market three years ago, the Legal & General New Build Club has supported several new and returning lenders to enter this vital sector and grow their share in the market. Three years ago, the market was dominated by two lenders with a combined market share over 60%. This has now been reduced to nearer 40% due to the increased competition in the sector. The New Build market has also benefited from improved policy and propositions, with extended offers, LTVs, builders’ incentives, improved service and support with several lenders appointing a New Build Manager.
We have seen increased lender participation in the Government’s schemes with over twenty lenders now supporting the Help to Buy equity loan scheme. We are also expecting to see further lenders participate in shared ownership this year.
FR: Do you foresee the supply and demand issue getting worse? What more can be done to ensure that people continue to have access to the mortgage market?
The UK housing market has not built the number of homes we need for many years. In March 2004, Dame Kate Barker stated in the Barker Review that we need to build 240,000 homes per year. This target has not been met. However, the Government’s Housing White Paper last month does provide a range of measures that will collectively begin to address the gap between supply and demand. We need to see greater diversification in the house building market with an increase in the number of SME housebuilders entering the market. Currently, around 50% of all new homes in the UK are being built by the top10 largest housebuilders.
The Government has provided various methods to support the demand of housing through shared ownership, First Buy, New Buy and more recently, the Help to Buy scheme. The New Build market has really benefited from the Help to Buy equity loan scheme, which has been vital in offsetting the affordability challenges that face first time buyers and movers in today’s market. It will be interesting to hear the Government’s proposals for the scheme beyond 2021, which is its current end date. Hopefully, the market will see a phased withdrawal approach, perhaps tailored specifically to first time buyers with a lower maximum purchase price.
FR: What positives and what shortfalls have you seen in the Government’s recent Housing White Paper?
There were a significant number of announcements within the Housing White Paper which will help the housing market in the long term. I was pleased to see the continued support of the Help to Buy equity loan scheme. The announcement of the Government’s support of shared ownership was greatly welcomed, as this tenure is essential in meeting the Government’s target to build 225,000 more affordable homes. Raising awareness and support for the Custom and Self-Build market will also help the housing market, as will the removal of the minimum of 20% starter homes on larger sites.
However, the one key area that Legal & General were hoping to see included in the White Paper was a reform on stamp duty. We have campaigned for tax relief for older homeowners who are looking to downsize – ‘Last Time Buyers’ - which would boost the number of larger family homes available in the market. Unfortunately, much of the White Paper is still subject to further consultation, when we need to start seeing these pledges implemented and start building more affordable homes now.
FR: What plans does L&G have for the New Build Club over the coming year?
Over the coming year, we are expecting to see continued lender engagement and support regarding proposition developments. There are several more lenders looking to enter the New Build, shared ownership and Custom Build markets this year while other lenders are looking to improve their propositions and market share. The Legal & General New Build Club will also be hosting our New Build Forums in May and November which are attended by key stakeholders from across the sector.
FR: If you could see one headline about the housing market in 2017, what would it be?
I would love to see 'Britain hits Government housebuilding target'!
