Tuesday, November 16, 2010

Maybe the banks would lend more if they built better-quality homes

Persimmon says lack of bank competition is still stifling mortgage market

Mike Farley, chief executive of Persimmon, the UK's second largest housebuilder, said home buyers were still finding it difficult to secure mortgages, particularly on new homes. "It makes absolutely no sense that some lenders won't offer as high a mortgage on a new home as they will on a second hand house. We need more competition to change this," said Mr Farley. Total completed home sales for the year are expected to reach about 9,400, compared to 8,976 in 2009.

Posted by drewster @ 09:11 AM (4134 views)
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8 thoughts on “Maybe the banks would lend more if they built better-quality homes

  • sibley's b'stard child says:

    Oh, wise Coalition in your infinite mercy, lean on these money-men to satisfy our customers’ demands for indentikit, badly knocked-up sheds.

    “It makes absolutely no sense that some lenders won’t offer as high a mortgage on a new home as they will on a second hand house. We need more competition to change this,” said Mr Farley.

    How can this be; are our constructs not as robust and structually sound as our Victorian counterparts?

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  • Sibley’s,

    I suspect the banks have learned some lessons from the “Sadly Broke” episode. Bradley Stoke was a new-build estate north of Bristol, which was the poster-child for the early 1990s housing boom and bust.

    In general the problem with all new-build property is that when you first buy it, you get the full marketing wizardry of the housebuilder: glossy brochures, show-homes, immaculate streets and gardens. When you come to sell, there’s only your poster in the estate agent’s window.

    Furthermore on greenfield sites you’re also taking on the risk of the neighbourhood. Will your future neighbours be angels or thugs? Until the estate has been established for a few years it’s hard to tell. Some friends of mine recently moved to a large brand new estate consisting of detached houses, terraces, and flats. I’m told the flats are popular with single mothers because the rents fall within Local Housing Allowance limits. At the moment you see a lot of young children there (there’s a playground and a primary school in the estate) and everything feels very safe. In ten years time when those kids are drinking White Lightning in the playground and doing handbrake turns in their pimped-up Saxos, it might not be so nice.

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  • builditandtheywillcome says:

    Strange how construction standards have become poorer after all the legislation put upon the involved trades by government over the last 5-10 years…….unless you have been part of one of these trades and are aware of how this has worked out in reality.Far from driving “cowboys” out of these trades,it has legitimised most of them.It is of no surprise to me that banks will not lend as much on a new build,as they well know flaws will show up over a relatively short space of time.Add to that huge numbers of immigrant workers who are here today gone tomorrow,and have been employed cheaply by british companys to boost profit margins,and you can easily see why standards aren’t as they should be.It is the building industry that,perhaps,shows best the failings of government policy on welfare etc.
    Lazy,unmotivated british workers that are not prepared to give up the comfort of sitting on a sofa watching their sky tv package to go and work…….welfare pays all they want in life.So immigrant workers fill the void,and fairly cheaply too.We have only ourselves to blame for this sorry mess.

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  • sibley's b'stard child says:

    Nice Spoonerism there Drewster; can’t say i’ve heard of that estate.

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  • “It makes absolutely no sense that some lenders won’t offer as high a mortgage on a new home as they will on a second hand house.”

    It makes absolutely perfect sense, partly for the reasons that Drewster explains above, and partly because there appears to be a “new house premium” of 5% or 10%, which clearly disappears after a year, and the risk that there is subsidence or something which is far more manageable with older homes.

    To use a crude analogy, if somebody buys a second hand car for £5,000, it will lose value at £500 a year, but if they buy a new version of the same model for £15,000, it will lose about £5,000 in value in the first year or two.

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  • @2 and 3 – interesting posts. Any examples of pro-cowboy regulations buildit….? Who’s running the NHBC?

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  • builditandtheywillcome says:

    Icarus @ 6

    Perfect example would be the Part-P legislation governing “electricians” in domestic dwellings.Now if we were aiming for higher installation and safety standards,then it would maybe seem sensible to say that only fully qualified electricians should have the ability to carry out electrical works in domestic dwellings.It would be relatively easy to have a national database of all those who hold the neccessary city & guilds qualifications and are therefore to be considered for the scheme.However,what we have ended up with is a scheme whereby some kitchen or bathroom fitter can go on a week long course and become an approved part-p installer.Have a google at how many “training” bodies now offer part-p courses to all and sundry who wish to pay the fees.What was worse was the fact that all of a sudden city & guilds qualifications appeared to become useless unless time served electricians paid an annual £500 subscription to part-p “provider”.
    So you see,it has little to do with safety or raising standards,and more to do with creating a tax raising industry within an industry.I could go on but it serves only to upset me even more! Bottom line is it has more to do with revenue than saftey and standards.

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  • Who’s running the NHBC?

    Who’s running everything?

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