Time to build a new dawn

Global ambitions to reconfigure the way we work, live and build to hit net zero by 2050 will be nothing short of transformative. The UK’s 29 million homes represent the oldest housing stock in Europe and emit around 25% of our greenhouse gas emissions. (1)

Increasingly, consumers are looking at new build, attracted by the lower bills A or B Energy Performance Certificate (EPC)-rated properties can provide and the allure of a brand-new home. 

It's because of this increasing demand, and the renewed focus on supply, that we believe the opportunities in the new-build sector will grow for both advisers and service-driven lenders ready to support it. 

Rebalancing supply and demand

The attraction of homeownership continues to grow as does our determination to support this goal for so many people. Building firms continue to deliver new homes but keeping up with demand has proved difficult in recent years, creating an imbalance which continues to increase house prices and hold back the housing ambitions of some consumers.

Data from the Ministry of Housing Communities and Local Government (MHCLG) offers some positivity this may be changing, with 29,310 dwellings started between July and September 2024. (2) This is a 17% increase on the previous quarter and a 38% rise year-on-year.

On the 11th March this year, in a multi-pronged Bill, the Government sought to reinvigorate the home building market further by addressing the planning constraints known to be an obstacle for UK builders, developers and homeowners. 

The revised National Planning Policy Framework (3) may address some of these challenges by reducing delays, enhancing infrastructure capacity, and improving overall Local Authority efficiency. Plans include extra staff and more streamlined processes at local planning offices in a bid to unblock planning permission bottlenecks. But it’s early days and these changes in isolation will only help part of the problem.

However, achieving sustainable demand will be the other side of the equation. Rebuilding consumer confidence after the cost of living crisis and affordability remain key issues for some potential homebuyers. History has shown us that when demand outpaces supply, property prices rise, making affordability more challenging.

A combination of Government policy to develop housing supply, mortgage lender innovation on products and service, coupled with broker expertise could play a part in transforming the housing market as a whole. After all, income multiples cannot just keep rising indefinitely to meet increasing housing costs.

Innovation in housing and mortgage provision 

Lenders like ourselves remain committed to the new build market and continue to innovate with strong service propositions and green products rewarding EPC at A-C.

However, the Climate Change Committee estimates £250 billion worth of investment is required to upgrade the UK’s homes to transition to net zero by 2050. (4)

Consumer awareness that newer homes are a ‘quick win’ pathway to lower carbon emissions and energy bills with an A or B EPC-rating are part of the added-value attraction of modern homes. 

Work is still underway finalising a Future Homes Standard, (5) which sets higher expectations on the building industry and aims to reduce carbon emissions by 75-80% on all new residential property from 2025. 

In February, the Government committed again to these proposals, paving the way for all new homes built to be net zero at no further cost to homeowners by 2030. This should mean all new homes will be fitted with more ambitious efficiency standards including a mix of solar panels, insulation and more efficient energy solutions as developers comply with the new measures. 

The perceived high costs associated with retrofitting a resale property can be a barrier for many, which adds to the appeal of new homes. Land Registry Data confirms new build property prices have been rising steadily in contrast to resale properties. The average price paid for a new build house was £420,000 showing annual growth of 17.7% against 1.8% for the average re-sale home at £285,000. (6)

New build lending partnerships

The types of property for buyers looking for modern homes will only diversify. First time buyers and buy to let investors currently buy the majority of new build property, so brokers will need to broaden their knowledge of the lenders serving this market. 

Lenders like us offer ring-fenced service teams with the expertise and underwriting flexibility to consider a broad range of property types, ensure the time to offer periods on new build applications are kept down. Managing clients also becomes easier after an approval in principle, when valuations are instructed on day one if builders require a set timeframe for completion on a home. Advisers always appreciate a provider able to give online offers, potentially valid for up to nine months, if a build hasn’t completed by the original estimated date. 

Marketing incentives like a 5% gift toward the deposit are also welcomed by us and some other lenders and can ease the affordability position for buyers. Cashback options for first time buyers in particular can be popular when paying their first deposit and potentially the cost of furnishing a new home. 

When it comes to new build, our Bespoke range is also available, offering a flexible lending approach for good credit quality, complex residential and buy to let buyers with a minimum income of £40,000 borrowing over £150,000. 

In one example, our underwriters are willing to exclude school fees in the affordability calculation if the fees are paid by another party. For the rising number of self-employed buyers, we are also happy to look at just two years of income instead of three, which can also make the difference between a yes or a no for customers.

For both sustainability and business success, it’s beneficial to establish a new build lending partnership with expert service-driven providers that can make your client’s greener home dreams a reality.

Notes

Net Zero and the UK’s historic housing stock: https://post.parliament.uk/net-zero-and-the-uk-historic-building-stock/#_edn4
Housing Supply, indicators of new supply, England: July to September 2024
 https://www.gov.uk/government/statistics/housing-supply-indicators-of-new-supply-england-july-to-september-2024/housing-supply-indicators-of-new-supply-england-july-to-september-2024#:~:text=In%202024%20Q3%20(1%20July,above%20their%202020%20Q2%20trough.

The Planning and Infrastructure Bill (11 March 2025): https://www.gov.uk/government/news/biggest-building-boom-in-a-generation-through-planning-reforms#:~:text=The%20Planning%20and%20Infrastructure%20Bill,roads%2C%20railway%20lines%20and%20windfarms.
Decarbonising heat in homes: https://publications.parliament.uk/pa/cm5802/cmselect/cmbeis/1038/summary.html#:~:text=The%20CCC%20estimates%20that%20an%20investment%20of,home%20will%20be%2C%20on%20average%2C%20under%20%C2%A310%2C000.
MHCLG update on the Future Homes Standard: https://mhclgmedia.blog.gov.uk/2024/10/24/reporting-on-the-future-homes-standard-and-solar-panels/
HM Land Registry (19 February)https://www.gov.uk/government/news/uk-house-price-index-for-december-2024
 

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