tm blog

The government’s commitment made in 2017 to build 300,000 new homes per year has been well documented. Two years down the line, although the numbers are falling short of the goal, the future looks positive for the new build industry. 

In the year ended June 2019, 173,660 builds were completed, 8 percent more than in the previous year. Private new build completions were 7 percent higher than the previous year, and housing association completions were 12 percent higher.

At present, the amount of new properties being built each year is higher than the number of new households being set up over the same twelve-month period. A new household is formed, for example, by children leaving home to live in their own property, or by couples separating to form two households where previously there was one. The Office for National Statistics estimated in 2018 that the number of new households per year will be 159,000. Even factoring in a possible post-Brexit slowdown in building, construction is likely to continue to substantially outstrip the new households figure. 

Government strategy 

In October 2018, the government revisited its pledge of the previous year and stated that it was committed to delivering 300,000 homes per year by the mid-2020s. This was accompanied by suggested reforms designed to improve the planning process and deliver investment where needed.

New permitted development rights allow larger extensions and building upwards from existing properties, while development and land acquisition rules are to be made clearer in respect of the creation of new towns and garden communities. 

It is also intended to allow Local Authorities to sell surplus land and develop more brownfield sites.

The government recently announced in August 2019, its intention to provide £600 million of new money via the housing infrastructure fund towards the building of 50,000 new homes in five high-demand areas in London, Bedfordshire and Essex, along with accompanying infrastructure and public services. This is in addition to the £1.3 billion already allocated to 76,500 homes.

Quality will be important, following former housing minister Kit Malthouse’s claim that much of the homes being built now will soon be ripped down and bulldozed as unsuitable. The Building Better, Building Beautiful Commission has been set up to tackle the challenge of poor-quality design and build. Its recent interim report, published in July 2019, has started defining proposals to ensure that future builds are beautiful, sustainable and designed to meet people’s needs.  

Future developments 

As well as new build on vacant land, unused retail space is likely to be made more widely available for residential development. Online shopping accounted for 18 percent of all UK retail sales in 2018, with over 2,400 stores closed on the top 500 high streets that year as well as units on larger out of town retails parks becoming vacant. Local Authorities have been reluctant to grant permissions for change of use in case of a future upturn in retail fortunes, but if the downward trend continues it is likely that more retail space will be released.

Creating mixed developments helps retail sectors thrive, by bringing in homes alongside shops and restaurants. A return to more traditional designs of high streets with public squares is happening in some areas, with different architects being brought in to design different blocks to provide visual variety.

London developments are leading the way with innovation, with the canalside site at Fish Island Village combining a social enterprise campus providing working space for local creatives with one, two and three bedroom homes.

The older generation continues to increase in number, with households headed by someone aged 65+ estimated to account for 88 percent of growth from 2016 to 2041. The government is keen to see more later living accommodation built and intends to give greater encouragement to developments by ensuring that suitable sites are made available to a wide range of developers.  They want older people to be able to choose from a range of housing options, including retirement and care homes. This in turn would bring larger family homes onto the market as older people move to more appropriately sized accommodation. 

Newly built social housing figures remain low, with councils now preferring to target funding towards affordable housing. Part of the reason for this is the higher rents payable for affordable housing, typically 80 percent of the standard market rate, as opposed to social housing where rents are just 50 percent. Local authorities, particularly in the South East, are setting up their own housebuilding companies to combat lack of council homes, with profits from the sale of full-priced new build homes paying for construction of new social housing. 

The number of affordable homes being built is rising as councils insist developers include a number within larger developments. In 2017, the number was up 11 percent on the previous year to 53,572. 

With many younger buyers struggling to afford to buy a home outright, more co-living developments are being designed, with hotel-sized rooms for each resident together with shared spaces. These are designed as a solution primarily for the younger generation, who can benefit from shared amenities and leisure spaces and live within a community. The developments are designed to be a step up from shared houses. 

The new ‘green standard’ 

In October 2019, the Housing Secretary unveiled a new green standard for all new build homes, aimed at cutting carbon emissions for future generations.

The Future Homes Standard, as it will be known, will ban gas boilers and other fossil fuels from new homes by 2025, instead requiring builders to install cleaner heat sources such as solar panels or air source heat pumps, to cut carbon emissions by up to 80 percent. Stronger building regulations will also be implemented to reduce the carbon footprint.

Local Authorities are now expected to produce their own design guide, reflecting the unique setting, character and history of their area, to ensure that developers build attractive, well-designed homes that suit their locale.

It is also intended to reform the planning system to make it faster and more efficient. A simpler system will allow Local Authorities to process applications more quickly, benefiting both developers and individual householders who want to extend or modify their homes. Local Authorities will issue their own design codes, setting out the characteristics of well-designed places and demonstrating what good design means in practice.  

New build work for Lawyers 

With residential construction continuing to increase year on year, acting for developers or their buyers is a good target market for property solicitors. However, dealing with a new build purchase can be an onerous task for the conveyancer. The amount of paperwork is substantial and the checklist is long, including checking planning applications, road and sewer agreements, common parts maintenance agreements, NHBC inspections, building regulations approval, access rights, completion requirements and more in-depth checks on the site on which the property is being built, for example in respect of flooding or environmental contamination. 

As well as this, agents and developers can pile on the pressure, demanding a 28-day exchange period or loss of the reservation fee and, potentially, the buyer’s chosen plot. 

Solicitors aiming to take on a substantial amount of new build work in the future can create systems of work around the special considerations required and dedicate staff members solely to this type of conveyancing to ensure a good workflow. Building a good name with developers and agents when it comes to new build is likely to result in more referrals and repeat business. On-site sales teams will be happy to find a conveyancer who understands the pressures their developer faces to keep to a rapid turnover and ensure deposits are received on time.

There are also opportunities to act on the acquisition and sale of part-exchange properties for builders who offer this service. Again, this is a specialised service, as the seller will have no personal knowledge of the property and will need to complete as a matter of urgency to release locked-in funds. 

Summary 

There is much to be positive about in the realm of new build, with increases expected in all areas of residential construction and improvements in the planning system anticipated. As sustainability issues become increasingly important, builders will need to consider environmental impact as well as whether their designs are aesthetically pleasing and suited to the community they serve.

It promises to be an exciting time for developers, as pressure to stop building identikit homes, reduce carbon footprint and the requirement to best utilise available space forces more innovative thinking. For those prepared to take on the challenge of building the homes that people really need, the future looks bright.

Want to find out more about the challenges facing New Build developments in the UK? Here is a collection of some of the latest research; showing the extent of the issue alongside proactive solutions for a better future. 

Addressing Our Housing Shortage: Engaging the Silent Majority

Shelter : March 2015

Although a little dated (2015) this report highlights some of the persistent challenges around the building of new homes. 

Key findings include:

• There is a sharp contrast between those who support homes being built in their local area, who are typically renters and shared owners, compared to the ‘outright owners who tend to oppose homes being built in the local area – reflecting the extent to which these groups are affected by the shortage of housing.

• Active opposition and support are more common among people living in rural areas, highlighting that housing is more hotly contested in these areas.

• The main reasons for opposing local housebuilding are pressure on local infrastructure and services, particularly roads, and the loss of green space. Loss of green space is more important to younger people, pressure on local infrastructure to older people.

• Actively opposing or supporting a local development is not particularly common – 86% of people have not done either.

Bringing home ownership back into reach: Assessing the Help to Buy Equity Loan Scheme after five years

Home Builders Federation : September 2018

This report summarises the positive impact the Help to Buy Equity Loan Scheme has had not only in helping First Time Buyers onto the property ladder, but driving a new wave of New Build housing supply.

Key findings include:

• Because Help to Buy is exclusive to new build homes, demand for new properties has increased since 2013, and builders have increased the number of homes delivered to better meet this demand. Since Help to Buy was introduced in 2013, net housing supply has increased by 74% to similar levels seen in the 1950s.

• The extra demand for new homes has seen unprecedented increases in investment by house builders in land and labour with planning permissions up by 88% over this period, clearly demonstrating a continued appetite by developers to sustain the recent increases in supply and deliver more new housing over the next three years in particular.

• Whilst transactions in the wider housing market remain subdued (down 21.4% on 2006 levels) activity in the new build market continues to rise. New builds now account for almost 15% of mortgaged housing market transactions compared to a long term average of 8.2%.

• Unlike previous attempts at such schemes, Help to Buy has been accessible to builders large and small, with over 3,000 companies, the vast majority of them small local builders, now registered.

Improving the home buying and selling process : Summary of responses to the Call for Evidence and government response

Ministry of Housing, Communities and Local Government : April 2018

Although not a dedicated report on New Build, the summary of responses to the Call for Evidence did include discussion around New Build (page 48 onwards). 

Key findings include:

• Over 13% of all respondents said that developers should provide a fixed completion date for the build and give more information about expected timescales. 

• Over 6% of respondents argued that developers should be regulated and an ombudsman set up to enforce these regulations. 

• Where something goes wrong, house builders and warranty providers should fulfil their obligations to put this right. 

• The Government are keen to improve redress for people who experience problems with their housing and to make them feel empowered to challenge poor practices when things go wrong. 

• 15% of respondents stated that buyers should be encouraged to secure a Decision in Principle before they make an offer on a new-build property. 9% of all respondents stated that developers and lenders should have pre-approved mortgages, valuations and/or surveys for new builds.

• The Government is clear that buyers of new build homes should not be placed at a disadvantage when compared to purchasers of second hand homes - and will continue to work with lenders and mortgage brokers to discuss specialised products for the new build market, including an extended Decision in Principle.

Rebuilding Trust: Discussion Paper

Grosvenor : July 2019

This research report explores why the public doesn’t trust the planning system, developers or local authorities when it comes to large-scale developments and their impact – and what could be done to begin creating better relationships and more trust for everyone’s benefit. 

Key findings include:   

• Just 2% of people trust developers to act in an honest way in large-scale development, and only 7% of people trust their local councils. That they only care about making money and do not care about the needs of the local community were key driving factors behind this mistrust. 

• A demand for more transparency throughout the planning process was also highlighted. 

• There is often a clash between high expectations and reality. Developers might be expected to fund social housing, for example, without regard to the commercial feasibility of doing so.

Hard Choices : How much should the nation spend on building new homes?

London First : September 2018

This report reviews the current spending on building new homes and what needs to be done (in real terms) to address the funding gap. 

Key findings include:

• Looking at the current capital cost of delivering new housing in England, it is estimated that the current cost of delivering 300,000 homes a year in England is c. £67.6bn. Compared to current investment of c. £47.9bn, this is a c. £19.7bn increase, or 40%. 

• Viable options for filling this gap, ranging from the Government filling the gap, the private sector filling the gap, or exploring the possibility of a mixed economy – where the Government increases its capital spending on housing delivery, while also creating a more enabling policy framework to encourage greater levels of private sector investment.

• The historic under supply of housing has placed significant upward pressure on the cost of housing, which has contributed to the current affordability crisis.

• There is a consensus across all the major political parties about the extent of, and challenge presented, by the housing crisis. There is agreement that more homes must be built, but a divergence of views as to how this might be achieved.

We spoke to industry experts – including Rob Hailstone (Bold Legal Group), Alan Milstein (Residential Property Surveyors Association) and Eduardo Reyes (The Law Society Gazette) – for their views on what needs to change to get Britain building, speeding up New Build transactions, and meeting the demand for more housing. 

Here’s what they said…

Eduardo Reyes, Commissioning and Features Editor at The Law Society Gazette:

We need to create greater density in outlying areas of cities and invest in our transport links

In the 20th Century, my home city of London achieved growth in homes in a way that has created challenges for future development. Many other cities and towns share this experience. In particular, the 1930s saw a boom in housebuilding, fuelled by new, widely available mortgage products. 

This great democratization of finance delivered huge swathes of housing, though a significant proportion was built in areas that were poorly-served by infrastructure, including transport. Hence, they remain part of the city’s great sprawl. 

We need greater density in outlying areas, of our cities and towns, and that means creating or improving attractive ‘town centres’, using vacant land, and improving our transport links. 

‘Section 106’ is inadequate and needs to be reformed 

‘Section 106’ – the mechanism by which developers reach agreement with councils on the provision of infrastructure and community facilities – needs to be reformed. It has proved an inadequate way to deliver the infrastructure and facilities needed to create new centres. 

One result has been further rings of development around older established centres – a sense of identity and convenience getting more diluted the further out you are, so the incentive for more rapid growth is reduced. 

Further out, we too often wind up with freestanding housing developments with low densities, which do not sit in any cultural or economic context other than a road trip to work and shops.

‘Section 106’ agreements are too often superficial, prettifying add-ons to new developments. A more powerful and reliable mechanism is needed.  

We need to tax unused land to stop people sitting on it as an investment

Tax law needs reform. Development potential increases the price of land even before homes are built on it. It has become a helpful asset for some businesses to sit on, including both supermarkets and developers themselves. We need to find a way to tax such unused land at a level that will bring it in to ‘use’.  

New laws keeping the cost of retail space down would help to create new centres with a heavier density of homes and businesses

Stricter Paris-style ‘designated use’ laws on commercial property, chiefly shops, should also be considered to keep the cost of retail space down, and its variety up – and such spaces should be designed into new centres. This strengthens the idea of a new ‘centre’, around which a heavier density of homes and businesses can grow, because people will sacrifice space to be near them. 

The high streets in my bit of South East London often have lower-cost retail units than seen elsewhere in inner London, and it has made a renaissance for independent businesses possible  – some wildly successful, others just optimistic try-outs, all of them adding to the convincing fabric of the place. 

Christopher Watkin, UK Property Market Commentator:

There should be incentives in place for building inexpensive homes

There has been a shortage of smaller townhouses and smaller apartments being built in the UK over the last 20 years. The builders do want to build, but there's a deficiency of building land in the UK, and if there's a shortage of building land, then of course new homes builders build whatever gives them the biggest profit. The properties that give them the largest profit are the biggest and most expensive properties and they certainly are not bungalows as they take up too much land. So who can blame them?

Yet would it surprise you to know that it’s not a lack of space (look at all the green you see when flying over the UK), it’s the planning system. Green belts must be observed, but only 1.2% (yes 1.2% - that isn’t a typo) is built on in this country as a whole with homes – we need the planners to release more land (and then force/encourage builders to build on it - not sit on it). Another problem is that of the smaller new homes that have been built, most of them have been snapped up for renting, not owning. 

So, what’s the answer? Build more Council houses? Yes, sounds great but the local authorities haven’t enough money to cut the grass verges, let alone spend billions on new homes. The Government did relax the planning laws a few years ago, for example for changing office space into residential use, yet they could do more as currently new homes builders have no incentive to build inexpensive homes or bungalows that the system needs to make a difference.

We must all remember that property will always be a great investment

Changing the dynamics of the national property market will only change in decades, not years. The simple fact is we are living longer, and we need 240,000 to 250,000 houses a year to stand still with demand, let alone start to eat into 30 years of under building, where the average has been just under 170,000 households a year. 

That means, today as a country, we have a pent-up demand of 2.25m additional households and we need to build a further 4.2m households on top of that figure for population growth between 2019 and 2039. So, irrespective of whether we have a short term blip in the property market in the next 12/18 months, investing in property is, and always will be, a great investment as demand will always outstrip supply.

Dominic Woodward, Director, Tri-core Developments:

We need to invest in our planning departments so workload, holidays and sickness breaks stop being a roadblock for planning applications  

The main roadblock is the planning system. Getting planning through in a timely and cost effective way is not straightforward. The planning portal says 13 weeks for a complex full planning application to be decided, but those involved in the system know this is not the reality. 

Routinely, consultation responses are not provided in time due to workloads, holidays and sickness breaks for those persons involved. This requires planning officers to request an extension of time meaning the clock stops before the stated deadline. Planning applicants have little choice but to accept these requests for extension, as refusing the request to extend means the application will be determined “as is” resulting in a guaranteed refusal – leaving developers between a rock and a hard place. 

Cut-off dates for consultation responses and more rights for applicants – even at the cost of more expensive planning applications

Providing cut off dates for consultation responses could help, and in the event responses are not provided by the cut off, that department loses the right to comment on the proposed application. It would be a “use it or lose it” right for consultees to get their comments in on time. This is the case at appeal, so should be no different for an actual planning application.

In addition, there clearly should be more rights for applicants to get applications decided on time. The ombudsman that covers planning has no teeth, the default position seems to be if you have cause for complaint, just go through the appeals process. That will add 6 months to 1 year – plus all the additional costs associated.

Although likely not popular, we would actually be happy to pay more for planning applications to have a better funded system – but only on the provision of getting a better service that delivers decisions on time. The system is woefully underfunded, there aren’t enough planning officers (bums on seats) and those that are there usually end up leaving to work privately for better money, only worsening the problem.

Alan Milstein, Chairman, Residential Property Surveyors Association (RPSA):

Industry-wide snagging standards could make all the difference 

In the rush to build more houses, it is almost inevitable that question marks are raised over quality. Often buyers are given only a 15 or 20 minute accompanied tour on the day before completion to point out any snagging issues, which may, or may not be rectified before they move in. 

Stories of new homebuyers subsequently finding hundreds of snagging issues, as well as far more serious structural failings, are disturbingly common, and the rectification process is all too often a battle against an uncooperative major corporate developer.

The Residential Property Surveyors Association (RPSA) believes that protection for consumers can only come about by the development of industry-wide snagging standards to facilitate an objective and accurate assessment of quality to be made, allowing builders to know what is expected, and an Ombudsman to have a measure against which to make adjudications.

Bringing developers and warranty providers to the table to begin the task of creating proper snagging standards has proved challenging and slow. Understandably, perhaps, builders don’t want to accept the need for snagging standards because, according to their figures, satisfaction rates against new home owners significantly exceed 90%. But the reality is that a worryingly high number of new homebuyers experience a moderate or significant number of snagging issues and find the rectification process to be difficult, lengthy and, often, highly confrontational.

Matt Smith, WPB and The Chair Consultancy:

We need a National Housing Service to protect British citizens’ wellbeing

We need a National Housing Service. Housing is as integral to the wellbeing of British citizens as health and yet it is treated with almost contempt by those in Westminster –  something which needs to be adjusted if we are to improve policies. 

This is not a new suggestion. Countless government-commissioned reviews, leading economists and industry trade bodies have lobbied for years in favour of setting up an independent housing body – akin to the Financial Conduct Authority or Bank of England, but tasked with measurable targets to deliver a set number of new homes every year. Critically, to also think long-term about the tenure make-up of the UK’s housing market. Our need has never been greater.

We need to start building for everyone – not just for capital gain

Britain needs to be strategic and even-handed in housing, focusing the attention on helping the young and balancing out the housing market. Looking beyond the five-year mark, we need to encourage the delivery of every tenure. Policy changes are required and should be our focus. As the age of home ownership continues to rise, building for everyone must become more important than just building for capital gain. 

Policy must genuinely support all tenures. With over 1 million people on social housing waiting lists, we must recognise that institutional and affordable housing are worthwhile endeavours and encourage greater investment into purpose built rental homes. We should also remove the additional 3% SDLT multiple dwellings premium, as this would increase the affordable housing contribution. 

Precision-engineered modular homes could help to build high quality homes for the future

The supply in the housing market needs to adjust and recognise the need for more, advanced labour forces, in order to keep up with the growing technological advances and more control at local level. 

Mark Farmer published a report into the UK’s construction labour model entitled ‘Modernise or Die’. He identified the need for innovation to solve the skills crisis, and claimed that “We have so big a challenge around the declining workforce in construction that we cannot recruit or retain our way out of it. We have to be prepared for a reducing workforce, which means we need to be able to build more with less”. That means new ways of building for the future.

All in all, the demand for change in this market is high. The real challenge will be democracy ‘buying into’ the change. However, innovation and planning for the next 50 years would help. Our current housebuilding industry is capacity constrained and can’t possibly meet the 300,000 annual target. Precision-engineered modular homes offer a new way of building high quality homes - in volume and faster than traditional construction. 

Joe Pepper, CEO at tmgroup:

It will require real vision and leadership to help address the problem

Why is building new homes so difficult?  After all, as a nation we have been through terrific periods of house building in the last century, so what has happened to us to make it so difficult now?  The answer is multifaceted, but in essence we have made the planning laws increasingly complicated and reduced the number of firms competing to build, whilst at the same time leaving it more to the market.

The roots of many of the current issues go back to the 1980s, when the government erroneously believed that the population was likely to decline over the coming decades. This led to a massively reduced element of social housing development, and a tightening of conservation law around where property could be built. This combined with the subsequent periods of boom and bust, caused a disproportionate displacement of smaller developers contributing to the dominance of the larger developers that we see today.  

Given the length of time that it takes to navigate the local planning laws, a developer has to invest at risk for a long period of time before they can be confident of getting a return, and that gives the bigger and more established developers a significant advantage and creates a blocker for new entrants. 

The ongoing disparity between supply and demand also fuels the house price growth, which dis-incentivises further growth.  As time goes on, the problem only builds up, and as the government also benefits from the growth in house prices, it will require real vision and leadership to help address the problem.

Removing communication barriers could help to improve the situation in the short term

At a more prosaic level, we can seek to improve the communication between all parties – developers, local authorities, conveyancers, estate and land agents and so on.

At tmgroup, we have been linking local authorities and conveyancers for almost 20-years, and have recently extended that to estate agents and consumers through our mio platform. 

We are also in active dialogue with lenders and developers about extending it further which would give all parties the real-time status of a deal without the associated chasing around which currently happens.  

It doesn’t take much imagination to extend that further into the planning process to save time for all parties both during the process and during the subsequent sales transaction.

Rob Hailstone, CEO, Bold Legal Group:

New Build property transactions can be significantly helped along by homebuilders choosing their developer’s recommended conveyancer

Back in the 90s, I was recommended many, many times by the ‘site girls’ of a large developer in the South West. 

They liked me to be instructed because: 

• I had already been through the site documents and had (with the developer’s solicitors) corrected anything that I felt wasn’t right, and was therefore quicker than a conveyancer who had to trawl through the sale pack for the first time.

• I was prepared to be proactive rather than reactive.

• I gave regular updates.

• My fees were competitive. 

• I would even walk the site at various stages with the developer’s solicitors to get a clear picture of the lay of the land, etc…

In short, I knew the development inside out.

On a number of occasions, I had to push back when something was wrong or didn’t suit a particular client. Did the developer like it, no, did I care they didn’t like it, not at all! If anything, I actually earned their respect. However, I am sure one ‘site girl’ in particular (Gloria) still spits feathers every time my name is mentioned because she missed her target on more than one occasion when I insisted something needed changing. The majority of conveyancers are professional and not easily swayed from the duties that they owe to their clients. Being recommended by a developer to act for their buyers should not, therefore, be an issue. After all, they act for buyer and lender more often than not, and cope well with any conflict there.

Want to share your thoughts on industry events, trends and predictions?

Get in touch with our marketing team on marketing@tmgroup.co.uk to find out more about adding your voice to our next panel discussion.

tmgroup spoke to Rebecca Kibby, CEO – Conveyancing Services, and Yanthe Richardson, Senior Associate, at Foot Anstey LLP about the biggest roadblocks to meeting “that 28 day deadline” – and what could be done to address them, including:

• Addressing the AML problem

• Improving the lending process around New Build incentives

• Better managing communication between all parties (especially when there’s a developer involved as well)

• Improving collaboration across property professionals, so even complex chains help to meet that 28-day deadline

• Finding an easier and faster way to manage the Help to Buy process

Q. What is one of the biggest causes of delays and frustration with New Build transactions? 

AML! Property professionals connected across a New Build transaction are at the mercy of industry-wide processes that extend far beyond what one profession can influence or control – and AML checks are a classic example of this. 

Anti-Money Laundering (AML) checks are inescapable, due to the high risk around residential properties and the heavy regulation in place for managing that risk. Whilst no one would question the “why” of performing AML checks, the challenge is in the “how”. 

Currently, homemovers have to provide personal information to all of the different stakeholders – from their mortgage broker and Estate Agent, through to their developer and solicitor – so each can conduct an AML check. This is irritating and time-consuming for everyone involved. 

For conveyancers, the situation is exacerbated by the need to also obtain “proof of funds”, and subsequently investigate everything from their client’s income, to their financial story and wealth check, which explains how a client has come to acquire funds into their savings account. It’s complicated and intrusive, especially as clients don’t always provide the correct information up front; resulting in lots of back and forth and significantly eating into that 28-day timeframe. When clients are receiving a gift, very similar checks are then repeated for the donor of those funds compounding the delays further.  

Q. What’s the solution to “the AML problem”? 

If each homemover had to complete just a single AML check at the very start of the property transaction and this information was shared across all parties, the process could be dramatically improved.

Unfortunately, this is easier said than done, as each profession is governed by their own regulating body – and, as they all have varying requirements for AML, it would be challenging to switch to a “one size fits all” format that every profession could rely on.

Even if this were immediately possible, the technology isn’t yet in place to share this data securely – although Blockchain certainly has the potential as a viable solution, so watch this space! 

Q. What else complicates New Build transactions – compared to second-hand home transactions?

Incentives… It is quite common in the sale of New Build properties that an incentive is offered to help “seal the deal” – including white goods and help towards Stamp Duty payments. Whilst fantastic for the buyer, this prompts further work for the conveyancer in complying with the lender's requirements – adding another roadblock to the progression of the sale.

Why? If an incentive is offered as part of the reservation, lenders need to know about it to ensure that it doesn’t impact value. This is because, historically, lenders have suffered losses in the event of a house being repossessed, due to not knowing about the incentives in place, which may have artificially inflated the overall assumed property value. Therefore, it has become part of a conveyancer’s due diligence to report on such matters and for developers to provide a CML Disclosure of Incentives Form (now UK Finance). 

This should be simple – but sadly, it isn’t. As each lender has different requirements for reporting on these matters, conveyancers have to double check Part 2 of The UK Finance Handbook (which is subject to regular changes) to progress every transaction – and can often wait on hold for up to an hour if they have a query for the lender over the phone.  

There is certainly room for improvement. The ideal solution would be for mortgage brokers to capture incentive information at the start of the process, and then for all lenders to amend their templates to accommodate this so that incentives were already listed on the mortgage offer. This would give everyone the information they needed in an accessible format upfront (without the conveyancer having to chase around for updates) – and the process would be much faster for everyone involved. 

In the meantime, lenders could take steps to better support conveyancers by adopting a more consistent approach to communicating any changes to their section of the Handbook, as well as improving their SLAs on call answering times.

Q. Do complex chains have a significant impact on meeting that 28-day deadline? 

Unfortunately, yes. Our own internal figures indicate that around a third of New Build property transactions are connected to a chain - putting that precious 28-day deadline into the hands of other conveyancers, who are often not able (or in some cases, not willing) to work their second-hand properties around developers’ tight timescales. 

This situation is compounded by the current lack of buoyancy in the property market, as developers simply don’t have the luxury of being able to qualify out buyers caught up in complex chains – even though they aren’t conducive to meeting that 28-day deadline. 

Q. Does the ‘Help to Buy’ scheme help or hinder New Build transactions?

Help to Buy Funding has undoubtedly had a material impact on the market and has been fantastic, particularly for First Time Buyers. However, the legal process is inconsistent and complicated in practice. The process for drawdown of the funding and subsequent repayment later can be primary causes of delay in conveyancing chains and more needs to be done to simplify and tighten turnaround times.  

As the scheme was introduced in 2013, many people are now reaching the end of the 5-year interest-free period and wanting to pay off the loan by refinancing or moving up the property ladder. In chain transactions and where one party has a Help to Buy loan to repay, the process of obtaining a valuation and basing calculations on the original purchase price, coupled with the delays in turnaround times from the loan administrators, mean that there is little conveyancers can do to influence the position. Now is the time to look at the process to make it a better experience for buyers. 

Q. The developer is often involved in progressing a New Build transaction. What difference does this extra party make?

In any given property transaction, there are many parties involved in progressing the sale to completion. However, for a New Build, there are even more, as the developer typically adds their own plot progressor into the mix. 

If things aren’t going particularly smoothly, it’s also fairly common for the developer to put forward even more representatives – potentially a Sales Manager or even Director to monitor progress and help speed up the process.  

Having so many points of contact creates communication challenges, as there are simply more people in the process who not only have an influence, but also need updating on progress. Of course, this isn’t a problem for any profession to tackle alone – it’s a challenge for the industry to get this right, by embracing collaboration and the latest technology has to offer. 

There is no easy way of updating all at once without clogging up inboxes, and it is disappointing that as an industry we still do not have a central platform for updating everyone connected in the chain simultaneously.  

Q. Are homemovers their own worst enemy when it comes to meeting that 28-day deadline?  

Although they may not be aware of it, homemovers do have the potential to influence the speed of their New Build property transaction. With such a tight turnaround, every day counts – from how long it takes them to complete a form or return ID, to how quickly they can return a phone call, it all has an impact on meeting (or missing) that 28-day deadline. However the legal process can be daunting and there is a lot to read, take in and digest. People need time to do that against the backdrop of a looming deadline and lots of professionals sending information all wearing different hats.  

New Build buyers have the benefit of being signposted towards a panel law firm to assist them in their purchase and who are familiar in detail with the site in advance. However, typically buyers don’t understand the value of working with a panel firm – which includes instructing a genuine specialist in New Build transactions and process, the influential relationships that could help move things along and the economies of scale that will save them money (as panel firms can offer a discount). 

It’s not just homemovers that can influence the timescales. The speed of the transaction depends on how good everyone in the chain is at “doing their bit”. From the plot progressor to the mortgage broker and of course the conveyancer, the more everyone pulls together, the smoother the transaction will be. 

Q. Any final thoughts? 

When you stop to think about the logistical considerations involved in buying a new home; the process itself, the multiple parties involved, the regulation and risk involved and the sheer speed at which it all has to happen, it sometimes feels like a miracle that properties exchange on time! Yet many still do, thanks to the hard work and determination of the professionals connected in the chain and because when the focus is there, it is in fact entirely possible in most cases. 

Ordering searches against New Build properties is notoriously trickier (and more time-consuming) than working with second-hand homes – from having to work without a postcode point of reference, to managing endless queries from data suppliers. 

Outsourcing helps firms boost their workload capacity and win more business

Yet, spurred on by the Government’s push, more and more New Build cases are making their way to property teams across the country; forcing firms to re-evaluate how they manage their workload – without draining their limited resources. For many, including Braddon Snow Solicitors, outsourcing has been the answer. 

By managing New Build properties on a firm’s behalf, tmgroup help property departments create new efficiencies and better meet tight developer timeframes. All of which helps to boost their workload capacity, as well as their reputation, so they can win more New Build work in their area.

Managed Services take the hassle out of New Build search ordering

tmgroup are working at the forefront of delivering an efficient approach to managing New Build properties – with solutions including their ‘Managed Development’ service, which makes it easier for property teams to manage multiple plots on the same development site.

This service is tailored to firms named as the “appointed conveyancer” on a development, as tmgroup hold all relevant information about the development, enabling firms to issue a quick and simple instruction as and when the next plot is in progress. All the firm has to do then is wait for the results to come back and pass them onto their client; giving them more capacity to take on additional cases.

Jane Blackett, New Homes Conveyancing Team Leader at Braddon Snow Solicitors comments:

“We’ve been using tmgroup’s service for a number of years but found we needed a different approach for New Build given the number of plots we act on.  tmgroup worked with us on what we needed and now, for just over a year, we have worked with a bespoke system that we find much easier – especially when managing multiple plots on the same development. Once the site is set up confirming how many plots we expect to act on, all we have to do is fill in an order form and send across the plot plan. We then just ping an email over with the plot number as and when we want searches ordered against the individual plots. It’s just a much more effective use of our time.”

Firms using the ‘Managed Development’ service also benefit from agreeing search bundle costs in advance (making it easier to advise their clients), query and supplier management to minimise turnaround times, as well as Management Information (MI) reporting to make it easier for them to keep track of long-term development projects.

tmgroup work as an extension of the in-house team to get the job done quickly

Working as an extension of the in-house property department, the tmgroup team deliver against conveyancing search requirements from initial instruction through to returned results – using bespoke processes and systems to project manage. All the while giving firms the peace of mind of working with a knowledgeable team, with over 10 years’ experience in managing portfolios.

As Jane continues: 

“The Managed Services team are brilliant! Any queries, we just give them a call. If something has come up and we’re desperate to exchange, they’ll always make that extra call to chase the search – and 9 times out of 10 they’re successful too! They’re always on hand and we can’t fault the service.”

Outsourcing isn’t just for large-scale development projects – it can also help firms better manage one-off New Build transactions

Challenges around New Build don’t just slow down portfolio projects, they can also hinder the productivity of teams handling individual plots. That’s why tmgroup have extended their Managed Service to support these cases too. 

As and when the service is required, property teams can simply log into the tmconvey platform, add basic instructions to a dedicated form (accessible from a button on the tmconvey homepage) – and leave the tm team to take care of the rest. 

As with the ‘Managed Development’ service, the team will then create and map the property, order the required searches and liaise with data providers – all to support an efficient process right through to the returning of results.

Firms save time with fewer calls and interruptions across the working day

Fielding queries from data providers is one of the biggest headaches with managing New Build properties, but it often can’t be avoided as data providers require a certain level of information (that they don’t always get first time) in order to process the search. 

By letting the tmgroup team take care of any queries, firms benefit from fewer calls and interruptions across the working day. Why does it make such a difference? Drawing on years of experience, the team liaise with data providers and developers, as well as fill in any gaps in information – utilising their industry knowledge and relationships to help the transaction progress smoothly for all parties.

Want to find out more? 

tmgroup don’t operate on a one size fits all approach. We can develop processes within our service to help meet your needs and save you time. 

Talk to your Account Manager today, or get in touch with our friendly Helpdesk team on 0800 840 5571 or email helpdesk@tmgroup.co.uk 

Here are just some of the conversations conveyancers, lenders and other property professionals have been having at our tmpropertyhub events in Liverpool across 2018…

1. “Second-time buyers are the ones really disrupting the housing market”

“I think it’s the people on their second moves that pose the real challenge to the housing market. They want to move up to get into the next location, but the differential cost is sometimes prohibitive. 

Many of them are at a time in life where they’ve got children and high outgoings, which makes it harder to move up the ladder. For the most part they don’t get any assistance – but if they don’t move, the first-time buyers can’t move either.” 

2. “Help to Buy is being used by a lot of wealthy people – not those it was really intended for”

“We’ve had some clients with exceptionally wealthy parents who are still going down the Help to Buy scheme route. I’ve also seen wealthy clients buying up new builds, not because they need to, but because they get to take advantage of Help to Buy, as well as Help to Buy ISAs to a certain extent.

I do find myself thinking that it really wasn’t designed for them – yet they are the ones able to take advantage of it.”

3. “Landlords are selling up due to tax and regulation changes – and adding to the housing supply”

“We’re seeing a lot of landlords selling up due to tax changes and new regulation coming in. It’s not for the amateur anymore. It’s just too expensive, and you can’t cover costs – so they are getting out.  

There are some positives to this. Now’s probably the right time for Landlords to get out, as they’ve made their capital return, so they aren’t losing out. This is also adding to the housing supply and helping the property market.” 

4. “The rise of ‘The bank of mum and dad’ is forcing conveyancers to adapt their process to manage the extra work”

“The bank of mum and dad is not a new phenomenon, but in terms of volumes right now, it’s almost one in two.

We can’t just let the mortgage offer expire because of the extra work either. We just have to adapt our processes and our workforce, so that we can deal with the actual work. 

We don’t charge for it. As far as we’re concerned, you just have to make sure you service the needs of the clients.” 

5. “‘The bank of mum and dad’ is supporting second-time movers too”

“First-time buyers are getting a lot of help right now – from the government with Help to Buy ISAs, as well as their parents with ‘the bank of mum and dad’.

However, we do see second-time buyers also making use of ‘the bank of mum and dad’. Probably not as many, but it does happen. It depends on whether they’ve generated any equity their first house.”

Are you noticing these trends in your local area? 

Want to join the next conversation in Liverpool? Our autumn tmpropertyhub is taking place on 10th October. 

Click here to register and find out more

Not based in Liverpool? Don’t worry! Our tmpropertyhub events are also taking place across a further 10 locations this autumn - from Leeds to Southampton.

Click here to find out if we’re coming to a town or city near you

Source : Liverpool Property Hub : 16th May 2018 : Attended by property professionals – including conveyancers and lenders. 

New Build sites can be time-consuming. This is often for reasons outside of a conveyancer’s control, particularly when it comes to the provision of information for location plans, developer and plot plans. This can also result in additional queries from suppliers, culminating in significant delays for conveyancing teams.

Designed to streamline the process, our New Build Managed Service is tailored to your needs to help save your teams time - and our early adopters couldn't praise it highly enough.

> Nicole Hancock, Legal Assistant, Residential Property Department, Clifton Ingram LLP:

“I used to find it really stressful to work with plans for New Build plots, but now I just send them onto tmgroup’s New Build Managed Service team and they take care of everything for me. I love it!"

> Amy Archer, Senior Paralegal at Gordons Partnership LLP:

"We especially appreciate the direct contact with the New Build Managed Service team, as we can send over our order and within 20 minutes receive confirmation that our searches have been ordered. It also helps that any queries come directly to us, so we don’t have to spend time checking up on things. Overall, it’s a very quick and smooth process.”

> Melanie Cox (Mrs)(FILS), Legal Assistant, Residential Conveyancing at Terry Jones Solicitors:

“I’ve been using the New Build Managed Service for a few months now and it’s absolutely brilliant. It’s helped to save me a lot of time, as all I need to do is fill in the template and send it off. Everything is then taken care of on my behalf – even the mapping! It’s much easier than all the to-ing and fro-ing I used to experience with New Build plots, especially as I no longer have to field queries and discuss plans over emails or phone calls – which can be challenging and time-consuming. I’ve also been very pleased with the customer service, as the New Build Managed Service team have consistently dealt with any questions or queries very efficiently.”

Let our experienced team manage New Build properties on your behalf 

Drawing on years of experience and long-standing relationships with suppliers, our experienced New Build Operations team are well-placed to process New Build searches on your behalf. All you need to do is fill in a simple template with the information you have – and we’ll take care of the rest.

Even when queries arise, our Operations team will do a thorough investigation to resolve the question. That will mean liaising with our search suppliers as well as the property developers on your behalf.

Results will then be emailed to any distribution list you require, as detailed within the search template. All of this saves your team time and energy, which may be better used elsewhere.

New Build Managed Service COMING SOON to tmconvey

For more information, please contact your Account Manager, or get in touch with Helpdesk on 0800 840 5571 or helpdesk@tmgroup.co.uk