New Build Mortgages

[xenomorph]

Hi all
So I got agreement in principle via Metro Bank and Power Mortgages this week on amount I looking for which is good however property cannot be newer then 13 months if I only got 10% deposit. Just wondering those people here who bought flats before the pandemic i.e 2019 and earlier, did banks also have the same stance on new builds or were they more relaxed before?
Wondering if things will change if I wait a while and see how it affects mortgage market once things open up and economy starts its road to recovery.

[ladymuck]

That's an interesting stance. I wonder if there's a quality concern about what was being built over the past year?

No idea on your question, sorry.

[xenomorph]

That's an interesting stance. I wonder if there's a quality concern about what was being built over the past year?

No idea on your question, sorry.

Yeah but different lenders have different criteria. Some now say it needs to be 2 years old. So unless you got 15% deposit you cant go for anything recent.
I remember 2019 broker told me as long as its a re sale and not from developer you will be fine for 10% but a lot has changed since then!

[courtg9000]

This probably has a lot to do with the NHBC warranty and exposure and time to locate fault. Some faults won't appear for a few years on a new build. Lenders have been under the cosh in the past few years with exposure to large NHBC warranty claims

[xenomorph]

This probably has a lot to do with the NHBC warranty and exposure and time to locate fault. Some faults won't appear for a few years on a new build. Lenders have been under the cosh in the past few years with exposure to large NHBC warranty claims

Hmm that dont make much sense. If issues occur a few years in then what difference will 12 months make? Metro needs it to be 13 months old+ for 90 LTV or 85 LTV for anything newer. Normally these warranty's for new builds are 10 years and I assume the developer would pay for repairs in those 10 as they are ones providing the warranty.

[courtg9000]

Hmm that dont make much sense. If issues occur a few years in then what difference will 12 months make? Metro needs it to be 13 months old+ for 90 LTV or 85 LTV for anything newer. Normally these warranty's for new builds are 10 years and I assume the developer would pay for repairs in those 10 as they are ones providing the warranty.

Not entirely sure but I have heard about this already from some property contacts who are heavily into BRRRR or variations (Buy Refurbish Rent Out Remortgage Repeat). Stuff about these warranties has already been mooted for this. It may be to do with numbers of claims being disputed by the developer or more likely their insurers and associated risk. Apparently these disputes are on the rise.

[mattster]

This probably has a lot to do with the NHBC warranty and exposure and time to locate fault. Some faults won't appear for a few years on a new build. Lenders have been under the cosh in the past few years with exposure to large NHBC warranty claims

That's probably part of it, but I suspect it also has something to do with the inflated price of new builds, especially when the help to buy scheme was running (is it still?) and it only applied to new build properties - which automatically added a premium to new builds that instantly evaporated after purchase, and put a lot of buyers straight into negative equity. A resale at "real" market value removes that distortion (and other new build price distortions, such as "free" car or furniture, just so long as you pay the list price and don't devalue every other property on the estate).

[Paralytic]

That's probably part of it, but I suspect it also has something to do with the inflated price of new builds, especially when the help to buy scheme was running (is it still?) and it only applied to new build properties - which automatically added a premium to new builds that instantly evaporated after purchase, and put a lot of buyers straight into negative equity. A resale at "real" market value removes that distortion (and other new build price distortions, such as "free" car or furniture, just so long as you pay the list price and don't devalue every other property on the estate).

This was my thinking too. There's a new build complex a few miles down the road from us, and we've heard first-hand and anecdotal evidence of people getting mortgage valuations lower than the agreed sale price. So they either have to accept a higher LTV (potentially meaning them having to move to a higher rated product) or pull out of the sale.

This is fine for the mortgage company when the owner has 10, 20, 30% equity in the house, but with just 5% equity, they'd be taking on some risk.

[vwdan]

That's probably part of it, but I suspect it also has something to do with the inflated price of new builds, especially when the help to buy scheme was running (is it still?) and it only applied to new build properties - which automatically added a premium to new builds that instantly evaporated after purchase, and put a lot of buyers straight into negative equity. A resale at "real" market value removes that distortion (and other new build price distortions, such as "free" car or furniture, just so long as you pay the list price and don't devalue every other property on the estate).

This'll be it. On the whole new build quality isn't that bad, and far more old houses are in dire need of serious remedial works. If the mortgage companies worried that much about the condition, they'd insist on surveying the huge percentage of 20's, 30's, and 40's housing stock being sold every year because much of that is now in a total state and needs full renovation.

As you say, new builds command a premium which pretty much evaporates immediately after purchase.

[northernladuk]

With all the stories flying around of the state of new builds it's hardly surprising some lenders don't wanna touch them. I guess it's that thing where you see two horror stories vs the 100's of thousands that have been built but I wouldn't touch a new build to save my life. Party because I've never liked plasterboard boxes but also knowing three people that have bought new and not one of them is happy still years down the road. One of them still doesn't have a tarmac road due to issues with persimmon and this is nearly 24 months later. You can imagine a lender doesn't want to lend full price against a house that still has no road to it. Seems a fair call to make to me.