New-build fortunes could be about to turn, creating opportunities for everyone

New-builds have certainly faced their fair share of problems, especially from a PR perspective. Generally, there is a feeling that new-build homes are of poor quality. There are endless snags discovered after a tenant has moved in, and developers are reluctant to fix them.

In fact, the average property came with as many as 157 defects in 2021, according to BuildScan, up from 80 in 2005. Meanwhile, some 97% of new-build homeowners reported at least one defect in their new properties once they were completed, a poll from the Home Builders Federation showed.

This issue, and others like it, had an impact. New-build demand fell by a fifth over the past five years, according to TwentyCi. But, what’s true now may not be true forever.

If we can get the new-build market right, there is plenty of opportunity for investors and buyers. There is evidence too suggesting everyone involved is doing what they can to get this right, once and for all.

Political reform immediately comes to mind. Labour has made it clear that it plans to completely reform our planning system, and get 1.5 million homes built in the next five years. It remains to be seen if this lofty target is hit, but the drive is apparent. Across the industry’s spectrum, most can agree on at least one thing – we need more housing.

There has been a renewed focus on repairing the new-build market’s somewhat tarnished image too. A new Homes Accelerator programme has been set up to unblock thousands of new homes, and speed up delivery of stalled housing sites. As is stands, there are around 200 large sites that have outlined or detailed plans ready to go, but have yet to begin construction. These sites alone could deliver up to 300,000 new homes.

Also, in 2022, a New Homes Ombudsman (NHO) was set up to force developers to “sharpen their focus” and deliver better quality homes. This organisation is set to cover 70% of newly built homes in the UK over the coming months. What’s more, it’s calling for the government to make it a legal requirement for all new housing developers to join its scheme.

These kinds of pressures may just turn the tide. Incentives are already emerging.

Already, some 31% of brokers said they are seeing more new-build incentives from housebuilders, according to a Mortgage Solutions poll. The deposit unlock scheme, potential extension of the mortgage guarantee scheme, first homes scheme, and more may all encourage buyers (young buyers in particular) to look again at the new-build market’s options.

This isn’t to mention the changes that may sway property investors and landlords. The government recently confirmed EPC targets are back, with all landlords being required to hit an EPC of C by 2030. Doing so will likely be very tricky for many. But, there is no getting away from the fact that, despite all their perceived ills, newer homes are on average 60% more energy efficient than period homes, according to the Home Builders Federation.

All told, buyers of all backgrounds will likely appreciate new stock coming to market. Regardless of any doubts they hold now. Our own research made this abundantly clear.

At MFS, we recently surveyed 2,000 nationally representative UK adults, 412 of whom had either bought a home in the year prior, or were in the process of doing so. The results showed that across all genders and ages, the vast majority of buyers believe building more homes should be a top priority for the new Labour government.

The market - including investors, lenders, and brokers alike – may be on the verge of embracing newness in a big way. Hopefully, by the time this ramps up, the new-builds available will be much more desirable.

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