New build focus: 2021

2021 will bring some significant changes to the new build market. Here’s what brokers need to know.

The pandemic may have knocked the Government’s homebuilding targets off track, but there are positive changes coming to boost supply and help buyers purchase new homes.

The COVID-19 impact

Housebuilding was hit hard by the pandemic in 2020, with national lockdowns having an inevitable impact on construction, as well as supply chain issues for many essential building materials.

In the second quarter of the year (April-June), new build starts in England were estimated by the Government at 15,930, a 52% decrease compared to the first quarter and 59% down on the same period of 2019. April – June completions were also down 64 percent compared to the same quarter in 2019.

Despite these dramatic falls, in December 2020, the Government reaffirmed its target of building 300,000 new homes a year, announcing plans to focus on utilising vacant buildings and building in cities while protecting the countryside.

2021 will see changes in the new build market that impact your clients, but there will still be plenty of mortgage options available.

What’s changing?

Help to Buy: The Government’s flagship affordability scheme changes from April 2021, when it will only be available to first-time buyers and regional price caps will be introduced, ranging from £186,100 in the North East to £600,000 in London The April 2021 date refers to completions, so new clients who are not first-time buyers needed to have applied for mortgages under the old scheme by December 2020.

To be classed as a first-time buyer under the Help to Buy scheme, customers must not own, nor have ever owned, a home or residential land in the UK or abroad. Customers who are married or in a civil partnership will need to make a joint application with their spouse or civil partner, who must also be eligible to benefit from the Help to Buy scheme. For these clients, Help to Buy remains available until 2023 and is an effective way to get onto the property ladder.

For next-time buyers, there are still standard mortgages available on new builds, and Virgin Money currently offers a wide range of mortgages for new build properties. We also offer shared ownership mortgages on existing and new build homes in England and Wales, available up to 90% of the share purchased.

First Homes scheme: The Government’s new First Homes Scheme plans to build flats and houses to be sold at a 30% discount to buyers who want to stay in their local community but can’t buy a home at market prices.

Importantly, the discount must be passed on to future buyers when First Homes are resold, so more people can be helped onto the property ladder.

There is no date for delivery of First Homes although they are expected as part of the Affordable Homes Programme in 2021.