Industry Conference – The reality of mortgage lending in the new housebuilding landscape

The conference, billed as the first conference of its kind to help lenders understand the reality of mortgage lending in the new housebuilding landscape was organised by BuildStore Financial Services, the self build, renovation and conversion mortgage specialists and was held at the National Self Build & Renovation Centre in Swindon on March 15th.



A packed audience of heads of lending, valuers, risk managers, surveyors and mortgage policy managers and those involved in setting mortgage strategy attended the free conference to debate the issues surrounding lending policy, and how it matches up with the practical realities of housebuilding regulation.

Modern Methods of Construction – More industry decision makers are recognising the significant benefits of modern methods of construction (MMC): better products and processes, and improved business efficiency, quality, customer satisfaction, and environmental performance.

Eco building – The introduction of the Code for Sustainable Homes in 2007 marked a step-change in sustainable home building. Eco building techniques, natural building fabrics and renewable energy technology will now be required to meet the Code standards.

Self Build –  A lack of suitable and affordable homes is driving the interest in the self build and self procurement sector, and with the Government’s Localism Bill, building your own home is set to become more accessible and more appealing.

The Conference:

Paul Broadhead from the Building Societies Association (BSA) the trade association representing mutual lenders and deposit takers in the UK including all 48 UK building societies started the conference by stating that he was keen to unblock the barriers to finance.

Tim Doherty, from the National Self Build & Renovation Centre took delegates through an excellent presentation on Modern Methods of Construction (MMC) & Eco Building.

Modern Methods of Construction (MMC) & Eco Building

MMC are increasingly favoured as a means of improving quality, reducing time spent on site, and overcoming skills shortages. The eco agenda has also made an impact on construction, with sustainable materials and techniques becoming more popular.  The presentations demonstrated the most common MMC and eco building techniques and the current mortgage lending policies which led in to Simon Middleton from Build Zone presenting a structural warranty providers view on these new methods of house building.

MMC and Ecobuild – A Structural Warranty Providers Perspective

The Build-Zone 10 Year Structural Warranty is DCLG designated warranty scheme provider with provision available for housing, social housing, commercial development, completed and self-build properties.

Build-Zone offer a flexible and competitive approach to warranty provision in all sectors of the construction and building industry, including those working on MMC and Ecobuild projects.

Simon explained how MMC and Ecobuilding projects are able to get Structural Warranty Provision, an insurance policy which covers:

  • defects in design, workmanship and materials causing major damage
  • defective weatherproofing
  • drainage
  • health & safety of occupants
  • contaminated land
  • loss of deposit

MMC and Ecobuild projects can easily obtain cover, largely due to their dedicated technical service company ‘SurveyorLink’ the Build-Zone partner approved inspector scheme – which audits the project at various stages.  Simon explained the technical audit process used and highlighted the risk transfer and claim trends for MMC and ecobuild projects, he surprised the audience by telling them that they had seen no MMC or Eco Build related claim notifications.

Simon concluded:

“Traditional building methods continue to produce workmanship claims on a low frequency basis.

MMC and Eco Building are definitely here for the long term and should be subject to exactly the same risk management and long term understanding as we place on traditional methods of construction”.

To speak to one of Build-Zone’s Structural Warranty experts, call 0845 230 9873 or visit www.build-zone.com

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Local councils to offer first-time buyer mortgage support

Fifteen local authorities team up with Lloyds TSB in a scheme to top-up first-time buyers’ deposits

First-time buyers who are unable to call on the bank of mum and dad to boost their deposit may now be able to turn to their local council instead.

Fifteen local authorities, including East Lothian, Blackpool, Newcastle-under-Lyme and Warrington, have agreed to put money in a Lloyds TSB scheme to top up the deposits of first-time buyers trying to buy a home in their area. The scheme, called Local Lend a Hand, allows first-timers to buy a home with a deposit of as little as 5%.

Raising a deposit is one of the biggest hurdles for first-time buyers since the 2007 banking crisis, with many lenders refusing mortgages to those whose savings are less than 20% of the value of the property they want to buy, and offering the lowest rates to those with deposits of 25% or more. The requirement for a big deposit has relaxed recently with more lenders willing to provide mortgages worth 90% of a property’s value, but only two – Yorkshire Bank and Skipton building society, via its estate agency subsidiary Connells – will lend up to 95%.

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Economy needs housebuilding budget boost

Tackling housing crisis would create 200,000 jobs

HBF: Urgent measures to dramatically increase housing supply and address the growing housing crisis must be included in next week’s budget. Providing desperately needed homes would create 200,000 direct jobs over the next year and stimulate growth giving the country a massive economic boost.

A year into office the Government is facing a huge housing dilemma. House building is at an all time low; planning permissions are continuing to decline; the number of first time buyers has collapsed; millions of families are languishing on Local Authority waiting lists; and there is an ongoing hiatus being caused by the Coalition’s radically different planning system that is still being formulated, with Local Authorities struggling to get to grips with the new incentive based proposals.

Housing projectMeanwhile, economic growth is crucial to the wider economy over the next few years. According to Government figures, even in its current crisis state, housing supply accounts for around 3% of UK GDP and provides between 1 and 1.25 million jobs in the UK.

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House prices fall for the eighth consecutive month

Experts predict prices will continue to fall as fewer people are getting loans and many are falling behind repayments

The average price of a UK home fell by 1.4% in January to £208,552 according to the Department for Communities and Local Government (DCLG).

The annual rate of house price inflation dipped to 0.5% in January, compared to 3.8% in December and a peak of 10.6% in May 2010, according to the DCLG house price index. It was the eighth consecutive month during which the annual rate of house price inflation has fallen.

Negative housing market data was also announced by the Financial Services Authority (FSA), which showed new loans to borrowers reached £37bn in the fourth quarter of 2010 – a drop of 10% compared to the previous quarter and an 11% fall compared to the final quarter of 2009.

The FSA said the number of new arrears cases increased in the final three months of last year to 38,800 – 6% higher than the previous quarter but still 5% below the 40,900 cases in the fourth quarter of 2009 . The total number of accounts in arrears at the end of 2010 was 343,400, unchanged from last quarter.

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House prices fall 2.8% year-on-year

Halifax house prices index shows decreases in yearly, quarterly and monthly measures giving an average house price of £162,657

House prices fell by 2.8% over the the year to February, according to the Halifax – the biggest annual fall since October 2009.

The bank reported a monthly change of -0.9% in house prices and a quarterly change – lenders’ preferred measure – of -0.4%, leaving the average house price at £162,657.

But Martin Ellis, housing economist for the Halifax, downplayed the falls saying there had been little change in house prices over the first two months of 2011, with this month’s 0.9% fall offset by January’s 0.8% gain.

“Overall, we expect a modest 2% decrease in house prices in 2011. Uncertainty over the economic outlook is likely to weigh down on housing demand this year,” he said.

“Fewer properties have been coming on to the market in recent months. This trend, if sustained, should improve the balance between demand and supply and help to prevent a more significant fall in house prices.”

The ratio of average house price to national average earnings for a male working on a full-time basis is also at its lowest point for a year, standing at 4.46 compare to 4.63 in February 2010.

Earlier this week, Robert Gardner, chief economist for Nationwide building society, said the low number of first-time buyers was “casting a shadow” over the housing market.

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