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Focus on new opportunity

The turbulence we all hoped would end soon has continued and even gained momentum, so where can you focus to build momentum in your business? There has already been considerable coverage of the opportunity in the buy-to-let market, so I think the newbuild market is worth a closer look.

Every new house built creates five jobs and generates a return of 284 per cent on each £1 spent, according to Lloyds Banking Group. Many borrowers will be first-time buyers and stimulating demand in this part of the market, can boost the whole chain.

Homeownership may be higher in the UK than in Europe but there is pent-up demand in the marketplace and experts have predicted a shortfall of one million houses by 2016. This continues to drive the private rental sector and rental yields which is fuelling buy-to-let growth.

When the Government’s New-Buy scheme was announced in the Budget, it was hard to predict its impact as the details were brief. But now, with Nationwide, Halifax, Santander and Barclays all lending, it is the perfect time to focus on this opportunity for your business.

The Prime Minister has stated he wants to “build an economy…in which people who work hard and play by the rules can expect to own a decent home of their own”. The New-Buy scheme is designed to provide help to up to 100,000 buyers.

To qualify for New-Buy, the client needs to buy a newbuild property priced at £500,000 or less for use as their main home. It must be a standard purchase (not shared equity or shared ownership), they have to be a UK resident or have indefinite leave to remain in the UK and they need to have saved a deposit of between 5 per cent and 10 per cent.

There are issues. Builders remain sceptical of the lenders and lenders are wary of valuations and pricing but with this market predicted to grow by £1.5bn, the incentive is in place for all parties to work together.

The FirstBuy scheme has earmarked £400m of public and private money to help around 10,500 first-time buyers in England to buy a newbuild home by spring 2013. This uses a 20 per cent equity loan which is interest-free for the first five years and is available to first-time buyers with a deposit of 5 per cent of their share of the purchase price. The maximum purchase price is £280,000.

Where do you find these clients? Many of your existing clients will have relatives who are trying to get into the housing market but doing everything yourself is not always the answer. Working with specialist intermediary firms on a referral basis may be a better option. They understand the builders’ demands, have access to expertise and products and will make you look good in front of your client.

These schemes are a useful stimulus but they are not a cure and with newbuilds in 2010 at an all-time low – 103,000 versus 147,000 in the last major recession in 1993, the focus needs to remain on joined-up thinking for bank funding for the mortgage market to return to the £200bn norm.

Dev Malle is sales and marketing director at Personal Touch

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