Since the financial crash, new builds have become notoriously hard to find funding for, with risk playing a significant role in decisions to refuse lending. Many banks are wary of the resale value on a new build and the consequences if a borrower were to default on a payment… A new build depreciates in value as soon as someone moves in, just like driving a car straight for the forecourt, so the property’s key selling point (the fact that it’s brand new) no longer applies once sold.
New builds were particularly popular before the financial crash with developments springing up nationwide. However, this created a few problems. Increasing developments caused many lenders to worry about over-exposure. Purchasing incentives equally became harder to monitor making property values more obscure. An abundance of swanky new build properties also affected the buy to let market, with many lenders losing confidence in landlords’ ability to find tenants.
What’s changed to make new build loans favourable?
As house prices continue to rise, many first time buyers are struggling to find a step on the property ladder and are turning their sights to renting. The current housing shortage has caused insufficient property supply with new builds filling the gap to meet residential and buy to let demand.
If, for example, someone becomes resigned to renting for longer than planned, they undoubtedly want to make the most of the location and amenities they may not be likely to afford when buying. The number of new builds developing in prime city centre locations – with extras such as gyms and concierges – has created a huge demand of tenants looking to get the most out of rental life.
Due to funding difficulties post credit crunch, there is now increasing value in new builds with transactions also becoming more transparent. The economic crisis and MMR previously left high street lenders hesitant, even impacting unregulated sectors such as buy to let, however recent changes have shown lenders are becoming more inclined to new builds once more.
Confidence in the property market has returned with a vengeance. Private lenders are offering flexible opportunities, better rates and increasingly bold product ranges – whilst ensuring security and the quality of assets are not jeopardized.
“Altering perceptions mean that even customers with adverse credit (who don’t meet high street credit scores) now have a better chance of securing their dream home. Rewards can be reaped for landlords too, with charges applying to buy to let as well as residential lending” says Islay Robinson, CEO of high net worth mortgage specialists Enness Private Clients.
If there is anything to take away from this, it’s that new build lending is much more promising. As the media keeps reminding us – there has never been a better time to take the property plunge!
So you may now be considering the opportunity to land a new build, be it as a buy to let investment or residential mortgage. That’s where we come in.
We understand that obtaining a mortgage is as much about your personal circumstances as affordability. With a wealth of contacts across the market and excellent relationships with every lender, we are committed to finding the right lender and best financial solution for you.
If you have any questions regarding new build criteria or simply wish to discuss your financial situation further, feel free to contact us for a personal consultation anytime.