CML news & views

Speaking at today’s Home Builders Federation annual market intelligence conference, CML director general Michael Coogan called for a commitment by lenders and developers to work together to help re-build consumer confidence in their respective industries.

Referring to the problems for lenders operating in an environment in which mortgages were effectively rationed by a shortage of funding, Coogan called for a shared agenda between lenders and builders – with goals over the short, medium and long term – to help restore mortgage and housing markets that were responsive to the need of consumers.

Although some of the relatively small number of active lenders in the market were now prepared to offer mortgages for 90% of the value of a property to some customers, market conditions were making 75% the norm for many others, he said.

Highlighting some of the challenges which the two industries had sought to address in the past, Coogan referred to issues like the previous non-disclosure by developers of incentives to buyers, some of the negative effects of bulk sales of properties to buy-to-let investors, and the provision of too many flats but not enough houses in some city centres.

He told conference delegates that an improvement in funding conditions would help deliver many of the things that builders were looking for from lenders: more mortgages, an easing of borrowing terms, an increase in the number of lenders offering mortgages on newly-built property and equality of treatment between new and second-hand homes. But such an improvement is some time in the future, and will not happen in the short term.

He went on to identify a series of commitments that builders could offer lenders in current market conditions including:

• a determination to help re-build trust and confidence in business relationships;
• full compliance with the disclosure of incentives requirements;
• a review of whether builders should fund mortgage indemnity insurance premiums to help incentivise lenders to offer more generous lending terms; and
• the construction of more properties that are popular with buyers – more houses and fewer flats, with the agreement of local planners.

Warning that both industries were unlikely to see a significantly changed operating environment in 2010, he called for sensitive government policies to support what lenders and developers were trying to achieve.

Newly-built property remains a vital component for a successful market delivering housing choice to consumers, he said, while re-building confidence in lending and the new-build sectors was a vital element of any future success.