News & Events

New-build homes bounce back strongly after Covid impact

Samson Consultants

Covid-19 led to a steep fall in housebuilding but output has since recovered to pre-pandemic levels.

The number of new homes being built dropped by 23% in 2020 as the Covid-19 pandemic caused widespread delays.

Construction was finished on just 123,151 new properties last year, the lowest level since 2012 and down from 160,319 in 2019, according to NHBC, which provides warranties and insurance on between 70% and 80% of all new homes.

The steepest falls in building levels were recorded between April and June, when the first national lockdown halted work on construction sites.

But output had recovered to being close to pre-pandemic levels by the last three months of the year.

Steve Wood, chief executive of NHBC, said: “Last spring saw a sharp shock to the housing market, and it is heartening that by the close of 2020, productivity levels had moved very close to those seen in late 2019.”

He added that demand for new-build homes remained strong, and some of the larger housebuilders had forward-sold properties into the summer.

The so-called qualification deadline – the date by which construction of the property must have been completed – has been pushed back by a further month until 31 March 2021.

The deadline for legal completion for homes being bought under the scheme remains unchanged at 31 March 2021, although under certain circumstances it can be put back until 31 May 2021.

The Help to Buy equity loan scheme enables people to purchase a new-build home with just a 5% deposit, with the government topping this up with a 20% loan that is interest-free for five years.

The current scheme is being replaced by a new version, which is only available to first-time buyers, on 1 April this year.

Why is this happening?

The housebuilding industry was hit hard by the first national lockdown, which led to work on construction sites being suspended.

But activity was able to resume over the summer following the introduction of Covid-secure working practices and it has not been impacted by subsequent lockdowns.

Despite these measures, the sharp fall in construction work April and June still led to a drop in the total number of homes built over 2020 as a whole.

Despite the qualification deadline having previously been extended by two months, there are still fears that many families hoping to take advantage of Help to Buy could miss out due to delays in their home being constructed.

As the current scheme ends on 31 March and the new one is only applicable to first-time buyers, there was a danger that many people could lose the chance to buy their home, through no fault of their own, if the deadline was not extended.

Who does it effect?

Although the deadline has been extended, it does not apply to everyone.

If you had reserved a property through the scheme by 30 June 2020, the deadline by which the property must be built has been extended until 31 March.

Under certain circumstances the date for legal completion can also be extended from 31 March until 31 May 2021, if building work was severely delay due to the first national lockdown. But housebuilders must receive approval for this delay from Homes England, the government’s housing coordinator.

If you reserved your home on 1 July 2020 or later, you will still benefit from an extension of the qualifying deadline until 31 March, but you must also be able to legally complete your purchase and receive the keys to your property to move in on that date.

If your home has not been built and you cannot move in on 31 March, or by 31 May for those who qualify for the later deadline, you will not be able to qualify for the Help to Buy equity loan.

Your housebuilder must unconditionally release you from your contract and refund your reservation fee. If you have already received an Authority to Proceed from Homes England, your builder is entitled to make certain deductions, but they must tell you about these first. If you have already exchanged contracts, they must also return your deposit.

The Help to Buy equity loan scheme in its current form will still close on 31 March.

What support is available to buy a new-build home?

The Help to Buy scheme enables people to buy a new-build home with just a 5% deposit, which the government tops up with a 20% equity loan that is interest-free for five years.

The government has extended the deadline for Help to Buy twice in response to building delays caused by the pandemic.

It had previously set a deadline of 28 February by which construction on properties being bought under the scheme must have been completed.

But it has since extended this until 31 March, or 31 May under certain circumstances, to ensure people do not lose out due to building delays.

The scheme is changing on 1 April, after which it will only be available to first-time buyers, and regional price gaps will be put on the value of homes that can be bought through it.

Top three takeaways

The number of new homes being built slumped by 23% in 2020 as the Covid-19 pandemic caused widespread construction delays

Just 123,151 new-build properties were finished during the year, the lowest level since 2012

Output had recovered to being close to pre-pandemic levels by the last three months of the year

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Please Contact Samson at info@samsonconsultants.com (or) 0208-221-1522 for further information.