Phil Spencer: Hello, this is Mortgage Insider from Barclays. I'm Phil Spencer,
Phil Spencer: TV presenter and property expert, and this is the series
Phil Spencer: where you'll learn everything you need to know about the
Phil Spencer: mortgage industry. Today, we're looking at new build in 2026.
Phil Spencer: Now, the government has pledged one and a half million new
Phil Spencer: homes over the next five years, but the number of
Phil Spencer: new homes approved fell at the end of last year.
Phil Spencer: So how are house builders working to meet that challenge?
Phil Spencer: And what are the trends that we can expect in the year
Phil Spencer: ahead? It's a really fascinating time. How has the industry
Phil Spencer: evolved since the end of Help to Buy as well?
Phil Spencer: Well, to answer all these conundrums and more, I'm joined
Phil Spencer: by Neil Jefferson, chief executive of the Home Builders Federation, and
Phil Spencer: Craig Hall, who is the director of strategic partnerships at LSL Financial
Phil Spencer: Services. Hello to you both. Thank you for coming on.
Neil Jefferson: Great to see you both.
Phil Spencer: Lots to talk through today. I think it's a really interesting
Phil Spencer: and relevant topic. Neil, if you can just kick off,
Phil Spencer: Home Builders Federation, or HBF.
Neil Jefferson: Yes. Home Builders Federation, we represent the vast majority of
Neil Jefferson: home builders in England and Wales. Our members build 80%
Neil Jefferson: of all homes, so it's quite a big footprint. So
Neil Jefferson: we represent them with government media, bring them together, work
Neil Jefferson: together on unproductive and progressive schemes.
Phil Spencer: Thank you. And, Craig, what's your role at LSL?
Craig Hall: Yeah, so I'm director of strategic partnerships for our financial
Craig Hall: services division. So LSL Property Services Group, we have a
Craig Hall: financial services division, we have an estate agency division, and
Craig Hall: we also have e. surv chartered surveyors. So we are
Craig Hall: experts across all things housing.
Phil Spencer: How do you see sentiment? Going into this year, how
Phil Spencer: are people feeling generally?
Neil Jefferson: I think there's expectation. There's a bit of optimism. I
Neil Jefferson: think it's been quite a challenging time. Politically, new government,
Neil Jefferson: and 18 months in, of course, the reality is that house-
Neil Jefferson: building in the UK and England and Wales certainly is
Neil Jefferson: flatlining. In fact, we've seen two consecutive years of decreases,
Neil Jefferson: 7% each year, in terms of housing supply. So we
Neil Jefferson: need to turn that corner, so I think this year
Neil Jefferson: is an interesting year for the industry. The industry is
Neil Jefferson: certainly set to deliver that growth. They have been for
Neil Jefferson: as long as labor have been in government, but there
Neil Jefferson: are quite a few issues that we need to get
Neil Jefferson: through, which I'm sure we'll discuss today.
Phil Spencer: And, Craig, how do you see things, general sentiment?
Craig Hall: Yeah, I think the sentiment is really positive in the broker
Craig Hall: world and in the lender world. I think there's a
Craig Hall: real huge appetite for mortgage lenders, which is fantastic. We've
Craig Hall: come a long way in the last 13, 14 years
Craig Hall: since the early days of when Help to Buy was
Craig Hall: born, and a lot of the lenders had sort of
Craig Hall: ran to the hills as far as new build was
Craig Hall: concerned post the global financial crisis. So we are now back in
Craig Hall: a much more stronger place with mortgage lending support, so
Craig Hall: I think going into this year, it looks like it'd
Craig Hall: be a strong year from a demand point of view.
Phil Spencer: Yeah, I completely agree. It was such a quiet end
Phil Spencer: to last year for various reasons, but actually life goes
Phil Spencer: on. People still change jobs and get married and have
Phil Spencer: babies and get divorced and die, and those things continue
Phil Spencer: to happen. I read that actually Boxing Day was a
Phil Spencer: complete record in terms of the numbers of people that
Phil Spencer: were active on the portals.
Craig Hall: And we're seeing that in our numbers. The last couple
Craig Hall: of weeks we've really started to see mortgage application numbers
Craig Hall: really tick up.
Phil Spencer: Because there's an interesting time lag, isn't there, between people
Phil Spencer: taking the decision, let's move, let's buy, let's sell. They
Phil Spencer: probably come to you first, and then the estate agents
Phil Spencer: get busy. Actually, the builders have to react, and that's
Phil Spencer: an even longer time lag.
Neil Jefferson: Yeah, and part of the challenge actually is predicting future
Neil Jefferson: demand and looking ahead to see what the environment may
Neil Jefferson: be. But I agree, it is quite difficult to predict
Neil Jefferson: looking ahead with some of the uncertainties. And the way
Neil Jefferson: the budget works these days as well, which is different
Neil Jefferson: to when I was young, the budget was kind of
Neil Jefferson: not a big deal and largely something that happened, and
Neil Jefferson: the price of beer and petrol change. Now, the kites
Neil Jefferson: that get flown by government to test the various things
Neil Jefferson: that they may change creates some uncertainty sometimes within the
Neil Jefferson: marketplace, which is certainly what we saw last year.
Phil Spencer: Yeah. Let's get into a bit of detail of any
Phil Spencer: trends that you anticipate seeing across the year. Any thoughts
Phil Spencer: on that? What are we likely to feel and see?
Craig Hall: I think we're now into that buying season again, aren't
Craig Hall: we? As I said, sort of post the winter period,
Craig Hall: we tend to see those peaks and troughs in the
Craig Hall: market. I think the key question for me is when
Craig Hall: will we start to see that supply come on side?
Craig Hall: There's definitely that demand there. Things are more affordable now,
Craig Hall: which I'm sure will come onto the whys and wherefores.
Craig Hall: But it'd be really interesting to know from Neil what
Craig Hall: his members are telling us around what are they building
Craig Hall: and when and when will we start to see that
Craig Hall: come on the market.
Phil Spencer: It's fascinating, isn't it? Because it's chicken and egg.
Neil Jefferson: Absolutely.
Phil Spencer: You need the demand, but you've got to have the
Phil Spencer: activity. You've got to have the activity, then you get the demand. Yeah.
Neil Jefferson: No, I think for us, one of the challenges in
Neil Jefferson: recent years has been planning, and I think you always
Neil Jefferson: hear that from the home- building industry. But at the back
Neil Jefferson: end of the last government, it was particularly difficult because they
Neil Jefferson: changed planning rules, abandoned local housing targets. So it takes
Neil Jefferson: some time to recover from that. And therefore, we run
Neil Jefferson: a housing pipeline, which actually looks at planning applications, and
Neil Jefferson: that's basically been at an all- time low. However, I'd
Neil Jefferson: say one of the reasons for me to be more
Neil Jefferson: optimistic is actually with the change to the planning policy,
Neil Jefferson: which is the National Planning Policy Framework, the MPPF, and also
Neil Jefferson: the new act, the Planning and Infrastructure Act, which was
Neil Jefferson: a bill until just a few weeks ago. I think
Neil Jefferson: there are reasons to be cheerful. There's also designation of
Neil Jefferson: gray belt and so on. So I think we will
Neil Jefferson: see an increase in a number of applications going in
Neil Jefferson: for new homes. That creates a challenge for under- resourced
Neil Jefferson: and overworked local planning authorities, which will be a test.
Neil Jefferson: But I think we can expect there to be more
Neil Jefferson: applications going in, which eventually, Phil, I hope feeds into
Neil Jefferson: more housing supply. But we do need this translation, as
Neil Jefferson: Craig says, from the underlying demand, which is absolutely huge,
Neil Jefferson: that needs to become effective demand. There needs to be
Neil Jefferson: ways of making sure that people are aware that actually
Neil Jefferson: they can enter into homeownership and they need support for
Neil Jefferson: that as well, which I'm sure we'll talk about.
Phil Spencer: Can we just go back to the planning departments and
Phil Spencer: the planning reform and whether there was simply enough people
Phil Spencer: in the planning departments to service the demand? And if
Phil Spencer: there isn't, when will there be, and whose responsibility is that?
Neil Jefferson: Yes. Even in opposition, we worked with labor to think
Neil Jefferson: about the changes they needed to make to ease the
Neil Jefferson: planning process and get more capacity within this system. And
Neil Jefferson: through the new policy framework, the MPPF, also the Planning
Neil Jefferson: and Infrastructure Act, which was enacted at the end of
Neil Jefferson: last year, we're seeing some positive changes, the reinstruction of local housing
Neil Jefferson: targets, the concept of the gray belt, even new towns.
Neil Jefferson: So there's lots of positivity. The second bit is delays,
Neil Jefferson: and actually particularly for smaller businesses. It's often the delays
Neil Jefferson: which are the real problem if they've got borrowings for
Neil Jefferson: land and they need to get on site more quickly.
Neil Jefferson: So to be fair to the government, they recognize that we need more planners in
Neil Jefferson: the system and they committed to bringing in 300 more
Neil Jefferson: planners a year, which is really a drop in the
Neil Jefferson: ocean. We estimate we need about 2, 500, but it's
Neil Jefferson: really, really welcome that that's been recognized. And actually in
Neil Jefferson: terms of looking at exemptions for small sites and finding
Neil Jefferson: ways of easing that so that the planning officers can
Neil Jefferson: actually focus on the bigger issues within their areas, that's
Neil Jefferson: been something we've seen from this government. And I think
Neil Jefferson: there's more to come on that.
Phil Spencer: So do you think that we're relaxing bureaucracy in order to
Phil Spencer: speed things up?
Neil Jefferson: Yeah. Some of the newer things like, which is uncontested by the
Neil Jefferson: industry, but things like biodiversity net gain, which means actually
Neil Jefferson: that post- development, the site has got better biodiversity credentials
Neil Jefferson: than before it was developed, and that's been managed. But
Neil Jefferson: actually that creates a huge amount of work for local
Neil Jefferson: planning authorities. There's only a certain number of ecologists in
Neil Jefferson: the country. So for very small sites, you can understand
Neil Jefferson: that perhaps that needs to be fast- tracked or eased
Neil Jefferson: and so that the fewer reports are required so that
Neil Jefferson: actually the local- level offices are able to focus on
Neil Jefferson: the big sites.
Phil Spencer: And if and when there are enough planning officers and
Phil Spencer: they can approve things, are there enough skilled builders to actually
Phil Spencer: build the property?
Neil Jefferson: That's a great question, and I think actually there's a
Neil Jefferson: lot of preparation going on in expectation of an increasing
Neil Jefferson: housing supply to get more people into the industry. To
Neil Jefferson: be truthful, at the moment, because we've seen two years
Neil Jefferson: of housing decline and some particularly difficult markets such as
Neil Jefferson: London, skills doesn't come up as the biggest issue for
Neil Jefferson: us and our members at the moment, but it will
Neil Jefferson: do. There's an awful lot of work going on to
Neil Jefferson: prepare for the future, to get a more diverse pipeline
Neil Jefferson: of people coming into the industry, to think about the
Neil Jefferson: skills that are needed, how we train them. There's various
Neil Jefferson: initiatives going on around the country, such as skills hubs.
Neil Jefferson: And through us, actually, at the Home Builders Federation, we're
Neil Jefferson: working with a number of colleges to improve the quality
Neil Jefferson: of what's happening there. And also, of course, last week
Neil Jefferson: I was at the opening of another new factory. One
Neil Jefferson: of our largest members, Bellway Homes, have opened a really
Neil Jefferson: impressive robotic factory up in the Mansfield area. So there's
Neil Jefferson: this move towards offsite manufacturer, particularly with wall panels, which
Neil Jefferson: again means that homes can be built offsite-
Phil Spencer: Quicker.
Neil Jefferson: ... and more quickly. Yeah.
Phil Spencer: Yeah. And more efficiently.
Neil Jefferson: Absolutely. Yeah. And that creates more opportunities as well in
Neil Jefferson: terms for people to work in a factory environment that
Neil Jefferson: may not be able to work out on site.
Phil Spencer: Neil, you mentioned London, and I read something over the
Phil Spencer: weekend that house- building in London's fallen 80% in the
Phil Spencer: last 10 years. There's only 5, 500 new homes in
Phil Spencer: London last year. That's a really low number. Is it
Phil Spencer: to do with, and I use inverted commas, the improvement
Phil Spencer: in building safety regulations?
Neil Jefferson: Yeah.
Phil Spencer: And I shouldn't laugh at that because it's a very
Phil Spencer: serious issue.
Neil Jefferson: Yeah, and I think actually there is an issue, though. The
Neil Jefferson: standards are well understood, and there's been new standards brought
Neil Jefferson: in terms of the use of combustible materials and also
Neil Jefferson: the requirement into all buildings for two staircases. There's been
Neil Jefferson: a new building safety regulator, which has come in, which
Neil Jefferson: does building control on all of those high- risk buildings.
Neil Jefferson: And that's been admitted. They've admitted they've been under- resourced.
Neil Jefferson: But it's under new leadership. There's been some good announcements
Neil Jefferson: recently. But there are some legacy issues to be dealt
Neil Jefferson: with. But London, it is catastrophic. I mean, out of
Neil Jefferson: the 1. 5 million new homes that should be delivered
Neil Jefferson: within this parliament, 25% of those should come out of
Neil Jefferson: London, and the numbers that you're talking about are absolutely...
Neil Jefferson: It's terrible. But I wouldn't just say it's to do
Neil Jefferson: with building safety and standards. Actually, in many ways, London
Neil Jefferson: has been affected by issues of regarding viability because there
Neil Jefferson: are so many developer contributions that are required. In London,
Neil Jefferson: there's not just one community infrastructure levy; it's like payments
Neil Jefferson: to local authorities. There's two. And there's all of the other costs that have come in. And since COVID, we've seen
Neil Jefferson: a significant increase in build costs, which means that so
Neil Jefferson: many sites are not viable or difficult. And also affordability
Neil Jefferson: as well. The prices are so high, for the first
Neil Jefferson: time in 60 years, there isn't a scheme to support,
Neil Jefferson: a government scheme, to support first- time buyers. So they've
Neil Jefferson: all added together, and I think actually London is a
Neil Jefferson: bit of an insight into what's happening in some of
Neil Jefferson: our other challenged housing markets around the country.
Phil Spencer: Okay. Now the HBF put out a big report in
Phil Spencer: January called The Broken Ladder, and it highlighted that the
Phil Spencer: challenges of affordability or the affordability gap between prices and
Phil Spencer: earnings and actually what people can do. Can you just
Phil Spencer: talk a bit about the conclusions from that?
Neil Jefferson: Yeah, sure. So this is something we publish quite regularly.
Neil Jefferson: This is the third in The Broken Ladder series, and
Neil Jefferson: the latest one shines a light on what's happening with
Neil Jefferson: homeownership. The government has targets for homeownership and increasing homeownership,
Neil Jefferson: but in fact, it's falling. And one of the key
Neil Jefferson: findings, I think, from that report, it makes many points,
Neil Jefferson: but actually is the gap, the 1. 5 million potential
Neil Jefferson: homeowners that have missed out, they could have been on
Neil Jefferson: the ladder between 2003 and 2026, and that's because affordability
Neil Jefferson: has fallen so much. And the conclusion of the report
Neil Jefferson: is that what we're saying, is that the government should
Neil Jefferson: be looking at a new scheme, government- backed equity loan
Neil Jefferson: scheme. We take our lessons from the various schemes or
Neil Jefferson: our learnings from the various schemes that have existed in
Neil Jefferson: recent years. As I said earlier, it's the first time
Neil Jefferson: in 60 years there isn't a government- backed scheme for
Neil Jefferson: buyer, first- time buyers, and it's most desperately needed. So
Neil Jefferson: where we are, I think when you read the report,
Neil Jefferson: Phil, you'll see that there's a lot of talk over
Neil Jefferson: recent years about deposits and closing the gap and making
Neil Jefferson: sure that the deposits... We're beyond that now. It's now we're
Neil Jefferson: into affordability where actually what's needed, Bank of Mom and
Neil Jefferson: Dad, is actually beyond what a mortgage lender would require
Neil Jefferson: as a deposit, but actually a much bigger deposit in
Neil Jefferson: order to make the home affordable. So we've got to
Neil Jefferson: think about ways of, as I said earlier on, making
Neil Jefferson: that underlying demand, which is huge, more effective.
Phil Spencer: Craig, Bank of Mom and Dad, in my mind's eye,
Phil Spencer: I think it's the 10th biggest lender. Is that about right?
Craig Hall: Yeah, I think it still is. Yeah. I don't think
Craig Hall: the official figures have been published for 25, but estimations
Craig Hall: were about 10 billion pounds worth of, I say lending,
Craig Hall: probably more like funding, gifting. And it's actually been rebranded,
Craig Hall: I think, by the industries the Bank of Family because
Craig Hall: it's going beyond mom and dad. It's nan, granddad, aunties,
Craig Hall: uncles, and even friends and wider family are supporting with
Craig Hall: that deposit to get the step on the ladder. I
Craig Hall: think the average deposit is in the region about 30, 000 pounds
Craig Hall: gifted from the Bank of Family. So it plays into
Craig Hall: what Neil was saying around that huge affordability challenge and
Craig Hall: raising the deposit.
Phil Spencer: And, Craig, Help to Buy was finished in England in
Phil Spencer: 2023, but it continues in Wales. Is that right?
Craig Hall: Correct. Yeah. Yeah.
Phil Spencer: Is there anything on the horizon to replace it?
Craig Hall: So you're right, it finished in '23 at a time
Craig Hall: when interest rates went up. So at a time when
Craig Hall: we needed it most, the scheme was withdrawn. We saw
Craig Hall: the base rate go up to, what was it, about 5.
Craig Hall: 75, 6%? I can't remember where it peaked now. And during the COVID era, the
Craig Hall: base rate was at 0. 1%, and Help to Buy was still
Craig Hall: available. So we've seen house prices continue to increase, albeit
Craig Hall: ease off a little bit, so that affordability challenge that
Craig Hall: Neil talked about is still absolutely there. In terms of
Craig Hall: what's filling the gap, I think there's been a few
Craig Hall: things over the last sort of 12 months that have been some real
Craig Hall: positive movements in the market. Some of the regulations have
Craig Hall: been relaxed with lenders around stress testing and things like loan- to-
Craig Hall: income caps. So what we've seen is that the sort
Craig Hall: of average increase for borrowers is about 35, 000 pounds more
Craig Hall: just by some of those moves that have allowed the
Craig Hall: lenders to be a bit more flexible with their lending
Craig Hall: policy, all of which then boosts affordability. I think the
Craig Hall: challenge is, though, is that a lender may say, " We
Craig Hall: will lend you X." I think in the last couple of
Craig Hall: months, actually, we've seen a number of the top six
Craig Hall: lenders move to six times loan to income, which is
Craig Hall: huge. That you used to cap out many, many years
Craig Hall: ago three and a half, four times, four and a half times.
Craig Hall: So we've started to see lenders push the boundaries, but
Craig Hall: looking at then the costs per month, how desirable is
Craig Hall: that? And I think, again, that's where it plays into
Craig Hall: Neil's point around where Help to Buy made it more
Craig Hall: affordable, more easier on the eye as part of that
Craig Hall: monthly affordability.
Phil Spencer: Yeah. What's the story in Wales?
Craig Hall: So in Wales, the scheme, because it's a devolved government, Help
Craig Hall: to Buy still exists, and it will close in 2027
Craig Hall: as it currently stands. Again, they had a scheme in
Craig Hall: Scotland, but the scheme sold out within no time. So
Craig Hall: you've got different challenges in different regions of the UK.
Phil Spencer: Neil, do you think we'll see something to replace Help
Phil Spencer: to Buy?
Neil Jefferson: Oh, I hope so, Phil. I mean, I think there's
Neil Jefferson: speculation in the media at the moment, and there's no
Neil Jefferson: doubt there's conversations going on. I think the biggest challenge
Neil Jefferson: that we have is that there's a view in some quarters,
Neil Jefferson: maybe within parts of government, that Help to Buy was
Neil Jefferson: inflationary, and the one thing this government doesn't want to
Neil Jefferson: do is drive up house prices. And so one thing
Neil Jefferson: that we're really looking forward to, and it's overdue, by the way, is that
Neil Jefferson: the government's actually carrying out its own evaluation of the Help
Neil Jefferson: to Buy scheme. And I thought that would be out
Neil Jefferson: by now. It's actually now due to be completed by
Neil Jefferson: May. And I think that will dispel a few myths
Neil Jefferson: with regards to what Help to Buy did in terms
Neil Jefferson: of increasing homeownership and increasing housing supply, and also, I
Neil Jefferson: think it will be clearer with regards to the impact
Neil Jefferson: it did have on house price inflation. Which I think
Neil Jefferson: if there was any house price inflation... And I can
Neil Jefferson: show you the charts that show the average price of
Neil Jefferson: a new home matched against an existing home over that 10-
Neil Jefferson: year period, and they're perfectly matched. If anything, the existing
Neil Jefferson: home has got its nose ahead at the end. So
Neil Jefferson: I think that report is well overdue. I really hope
Neil Jefferson: the government does grasp the nettle. It's massively overdue. We've
Neil Jefferson: got a proposal in. The Labor, actually, in not opposition
Neil Jefferson: coined this name of Freedom to Buy, so we've gone
Neil Jefferson: with that. And we've looked at these various schemes that
Neil Jefferson: have existed, and we think, actually, that developers can make
Neil Jefferson: a contribution to the scheme. Government can back it out.
Neil Jefferson: And half of those loans, Craig, have been redeemed now.
Neil Jefferson: And I know there's half a book to get through,
Neil Jefferson: but it looks quite positive. So in my world, and
Neil Jefferson: our members are very diverse, they don't all build for first-
Neil Jefferson: time buyers, but it's absolutely unanimous. They completely agree as
Neil Jefferson: a membership that there needs to be a scheme for first-
Neil Jefferson: time buyers to get the whole of the market going
Neil Jefferson: again. So fingers crossed, let's hope so, but we've got some
Neil Jefferson: work to do.
Craig Hall: And I think... Sorry, Phil... I think the other thing to say
Craig Hall: is that shared ownership plays an important role. There's a
Craig Hall: report done I think by the CIH in 2017 that
Craig Hall: said there were 10 buyers for every one shared ownership
Craig Hall: unit back then. I would imagine that has increased significantly
Craig Hall: due to everything we've talked about with affordability. We've seen
Craig Hall: lender innovation with policy and criteria, and we've also seen
Craig Hall: a private scheme recently take off. Barclays are a supporter
Craig Hall: of a scheme called Reside, so that is a private shared-
Craig Hall: equity scheme trying to mirror the Help to Buy scheme,
Craig Hall: albeit it's backed by private equity; therefore, it comes with
Craig Hall: an interest charge on the equity loan from day one.
Craig Hall: Whereas Help to Buy was interest- free for five years,
Craig Hall: of course.
Phil Spencer: So really, there's innovation coming thick and fast from all quarters.
Craig Hall: Oh, yeah. Yep. Yeah.
Neil Jefferson: I would just make the point that really welcome the work that lenders, including Barclays, have
Neil Jefferson: done. They've really responded to the government's request for them
Neil Jefferson: to have a think about their lending. But for me,
Neil Jefferson: it's about discoverability, and as Craig says, as you said, actually,
Neil Jefferson: Phil, the problem is that perhaps that potential home buyers
Neil Jefferson: are only aware of what they can borrow and actually
Neil Jefferson: get to see their broker. Whereas when there's a government-
Neil Jefferson: backed national scheme and signs are all up can actually think, "
Neil Jefferson: Yeah, this could be the time." So there's been some
Neil Jefferson: great work done by lenders. We welcome the private schemes
Neil Jefferson: which have been aiming at taking the place of Help
Neil Jefferson: to Buy, the gap that was being left, but there's
Neil Jefferson: more needed. Yeah.
Phil Spencer: One last question on supply, if I may. So we've
Phil Spencer: talked about the planning reform, and I'm wondering, will we
Phil Spencer: ever see a day where the councils can build for themselves?
Neil Jefferson: Yeah. I think this government certainly would like to see
Neil Jefferson: that. You mentioned earlier on about the skills gap, and the
Neil Jefferson: truth is is that back in the days or decades ago
Neil Jefferson: when many homes were built by local authorities, council houses,
Neil Jefferson: they had all the skills in- house to do that,
Neil Jefferson: and that's been lost over years. The truth is we
Neil Jefferson: need as much diversity in housing suppliers we can, so
Neil Jefferson: we need homes for private sale, we need shared ownership,
Neil Jefferson: all the different tenures. We need the private sector, institutional
Neil Jefferson: investors, to step up for Build to Rent. And there is
Neil Jefferson: a desire, I think, to see local authorities also step
Neil Jefferson: into that place, as well as housing associations. And to
Neil Jefferson: give credit to the government, the one thing it did
Neil Jefferson: do last year was to put quite a bit of
Neil Jefferson: funding, we haven't seen the cash yet, but put funding
Neil Jefferson: into housing associations for them to develop as well.
Phil Spencer: Okay. I didn't know that.
Neil Jefferson: So there is that ambition, but I think there are
Neil Jefferson: some challenges along the way, which is mainly to do
Neil Jefferson: with skills.
Phil Spencer: Any other particular challenges that we haven't talked about that
Phil Spencer: we're likely to feel in the year ahead, would you say?
Craig Hall: I think-
Phil Spencer: Something fresh?
Craig Hall: We often talk a lot about first- time buyers when
Craig Hall: it comes to the new build market because of the
Craig Hall: schemes that we've talked about, but actually, it's a really
Craig Hall: interesting market this year because 2026 is five years on
Craig Hall: from 2021 being the year of the race for space post-
Craig Hall: COVID. So we had that real surge in demand in
Craig Hall: 2021, people going out and living further afield and out
Craig Hall: in the country. And of course, a lot of those
Craig Hall: people back then, interest rates were ultra low, were taking
Craig Hall: out five- year fix, so they are maturing now.
Phil Spencer: Got it.
Craig Hall: So what we're seeing is they will be coming off
Craig Hall: in ultra- low rates. In some cases, they may start
Craig Hall: with a zero or a one or a two, and
Craig Hall: then dropping onto a rate that starts with three, four,
Craig Hall: or five. So the term payment shock is still something
Craig Hall: that will be felt in the market this year. Outside
Craig Hall: of everything else we've talked about, there's some interesting market
Craig Hall: dynamics. And I think for the brokers listening, they need
Craig Hall: to stay close to their client bank. As they go
Craig Hall: through this year and those maturities come up, they really
Craig Hall: need to start engaging with them three to six months
Craig Hall: out to understand what their plans and their customers' plans,
Craig Hall: aims, and ambitions are for this year and beyond.
Phil Spencer: Good advice. There are always so many variables. It never
Phil Spencer: stands still. But that's what keeps us interested. It keeps
Phil Spencer: it fascinating. Let's just talk a bit about the brokers
Phil Spencer: and things that they should be aware of, or new
Phil Spencer: standards or new rules that are going to be coming
Phil Spencer: in that you really think brokers have got to be
Phil Spencer: focused on. Future homes standards, does that fit into all of this?
Neil Jefferson: Yeah. So we're currently awaiting, it may be out by
Neil Jefferson: the time this addition is broadcast, a government announcement on
Neil Jefferson: the future home standard. It's been long- awaited, but essentially,
Neil Jefferson: Phil, what we're going to see is that new homes
Neil Jefferson: will be mandated to no longer be allowed to have
Neil Jefferson: a gas connection, so no more gas boilers. So we're
Neil Jefferson: looking at electrical heating for space heating and water heating
Neil Jefferson: in homes. And the winning technology there at the moment
Neil Jefferson: seems to be heat pumps, which are generally... They're more
Neil Jefferson: widely available in new home development at the same time. And
Neil Jefferson: the other key component in terms of technology are solar
Neil Jefferson: panels on the roof, so photovoltaic panels that generate electricity.
Neil Jefferson: And the truth is even at the moment, 50% of
Neil Jefferson: all homes being built right now around the country have
Neil Jefferson: got solar panels, and that's becoming a regulatory requirement. What
Neil Jefferson: we're waiting for is to find out how many solar
Neil Jefferson: panels will be required on the roof. So that announcement
Neil Jefferson: will come soon from government and then that will kick
Neil Jefferson: in. In terms of the fabric of new homes, if
Neil Jefferson: you like, the insulation levels and the windows, they're already
Neil Jefferson: at really, really high levels, which is why it's part
Neil Jefferson: of the appeal of new build with so many new
Neil Jefferson: build properties being EPC, AMB- rated, which is good all
Neil Jefferson: around, it's good for lenders, it's good for homeowners, and we've-
Phil Spencer: I'm often talking to people about house prices at my
Phil Spencer: television work, but actually it's not just buying the house. You've got
Phil Spencer: to live in it. You got to run it. And
Phil Spencer: people are far more aware of the costs of...
Neil Jefferson: The other thing is water. We did another report. We
Neil Jefferson: regularly work out what the savings are for new build
Neil Jefferson: buyers on gas and electric, but also water as well,
Neil Jefferson: with the charges that are now in place for water,
Neil Jefferson: the fittings that go into a new home with regards
Neil Jefferson: to water use and the way that water is used,
Neil Jefferson: again, generates savings for consumers as well.
Phil Spencer: Craig, just to finish off with, is there one thing
Phil Spencer: that you think brokers should really take away from listening
Phil Spencer: or watching this?
Craig Hall: A phrase I regularly use about this sector is there is
Craig Hall: never a dull moment in new build. I think, as
Craig Hall: we've heard, it's so politically linked. We live in a
Craig Hall: very global world now, which changes everything that we do
Craig Hall: from one year to the next. We never quite know
Craig Hall: what we could be facing into. So I think staying
Craig Hall: on top of all of these things, where are we
Craig Hall: at with the government, these one and a half billion homes, what's
Craig Hall: coming down the track with future homes, what's coming down
Craig Hall: the track with new schemes, the private schemes, the lending
Craig Hall: policy, I think every part of the mortgage market is
Craig Hall: getting more complex, from new build to secondhand to buy- to-
Craig Hall: let to later- life lending and everything in between. To
Craig Hall: be a generalist, I think is quite difficult to stay
Craig Hall: on top of all that, and that's why we see those
Craig Hall: real specialist new build brokers that work every day with
Craig Hall: the builders. They've got a real tight relationship. So they're
Craig Hall: on top of all of this stuff, including which lenders
Craig Hall: will accept incentives. The more you look, the more you
Craig Hall: find when it comes to the new build market.
Phil Spencer: So it's sounding like it is a bit of a
Phil Spencer: case of being a specialist.
Craig Hall: Absolutely.
Phil Spencer: Yeah. And rightly so too, actually, because it has got
Phil Spencer: more complicated.
Neil Jefferson: It has. I think against that backdrop, I think my
Neil Jefferson: message would be about sticking together and having one voice,
Neil Jefferson: and I think that we work closely with Craig and his
Neil Jefferson: colleagues and all the lenders. Quite a number of the
Neil Jefferson: lenders are actually members of HBF. But yeah, I think
Neil Jefferson: it's really important, not just that we work together in
Neil Jefferson: a more complex environment, as we've just been saying, but
Neil Jefferson: also for government who are picking their way through this
Neil Jefferson: quite complex environment, it's really helpful if we do all
Neil Jefferson: speak with one voice. There'll be different views, but actually
Neil Jefferson: when we're landing on recommendations, clearly we're more likely to
Neil Jefferson: be successful in making our case if we all stick
Neil Jefferson: together. And if I look at certainly when we talked
Neil Jefferson: earlier on with regards to planning reform, nothing's ever perfect,
Neil Jefferson: but in terms of the overall changes that have been
Neil Jefferson: made already, they've been widely agreed and supported by the
Neil Jefferson: industry. So I think it's the same going forward with
Neil Jefferson: market issues and lending issues. If we can continue to
Neil Jefferson: work together as we do and try to keep that
Neil Jefferson: single voice, then that'd be really helpful.
Phil Spencer: Well, watch this space. It's going to be an interesting
Phil Spencer: year. Thank you both very much indeed.
Neil Jefferson: Thank you.
Craig Hall: Thank you.
Phil Spencer: Really, really fascinating. That was Neil Jefferson, chief executive of
Phil Spencer: the Home Builders Federation, and Craig Hall, who's the director
Phil Spencer: of strategic partnerships at LSL Financial Services. Just to point
Phil Spencer: out, we are recording this on the 2nd of February 2026.
Phil Spencer: The views expressed by myself and external guests are not
Phil Spencer: necessarily the views of Barclays. But thanks for listening to
Phil Spencer: Mortgage Insider from Barclays. I'm Phil Spencer. If you're listening
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