New Build Hub

All you need to know about our New Build proposition

ONLY FOR USE BY MORTGAGE INTERMEDIARIES

The Basics

  • New Build definition: Any property built, first occupied in its current state or significantly modernised, refurbished or altered within the last two years. The decision as to whether a property meets this definition will be made by the valuer at the point of valuation
  • Maximum LTVs Residential: Flats 75%, houses 85% (75% for mortgages over £1m) Buy to Let - 75% Based on net purchase price or valuation whichever is lower. These maximums also apply to further advance requests if the property meets the New Build definition above. Our maximum LTV for debt consolidation is 80%
  • Minimum loan amount: £25,000
  • Lending limits on individual developments: A limit will be set for how many properties we will lend on in each New Build development (including developments that involve the conversion of usage from office to residential). This does not apply to single properties that have been converted into flats. Limits will vary according to each individual development and must not exceed 25%. The limit will be set and monitored by our Valuation Panel Manager. By using LiveTALK, you'll be able to find out our exposure and the number of units left on any site under development AND any new sites

Structural Warranties

Structural warranties issued retrospectively cannot be accepted. In the absence of a valid warranty, we will accept a Professional Consultant Certificate from a suitably qualified professional, if provided in the format detailed in the CML Lenders’ Handbook. The solicitor acting for NatWest should confirm the requirements are met and that the Certificate was issued prior to exchange of contracts. Architects’ Certificates without the benefit of the Professional Consultant Certificate are not acceptable.

We will only lend on New Builds/ Renovations where one of the following 10 year or more Structural Warranties are in place:

  • NHBC
  • Zurich Municipal (not available from August 09)
  • Trenwick International
  • Premier Guarantee *
  • Build Zone & Buildcare
  • Building Lifeplans Limited (BLP, Allianz Guarantee )
  • Ward Cole (12 year structural warranty)
  • LABC (New Home Warranty – not self build)
  • Castle 10 ( Checkmate)
  • Build Assure (New Home Structural Defects Insurance)
  • Global Home Warranties
  • The Q Policy
  • Protek New Home Warranty
  • Aedis Group Homeproof Structural Warranties
  • Advantage Warranties
  • International Construction Warranties
  • Ark Residential New Build Latent Defects Insurance

* Premier Guarantee Warranties for flats will be referred to us by the acting solicitor – check the amount of cover at least equals the reinstatement figure on the Valuation report.

Modern methods of construction

We will consider lending on properties constructed of sustainable, non-traditional New Build construction systems, provided they are accredited by the Build Offsite Property Assurance Scheme (BOPAS) and have an acceptable structural warranty. Properties constructed using modern methods of construction not covered by the BOPAS will be considered on their individual merits by the valuer.

Help from builders and leaseholds

Assisted move

Where a housebuilder will typically pay the fees for two local estate agents to market the applicant’s existing property for a quick sale enabling them to proceed with the purchase of their New Build property. This is NOT classed as a scheme but as an incentive, so the applicant can use a scheme such as Help to Buy to purchase their New Build property. This is NOT classed as a scheme but as an incentive so please refer to our 'incentives' section to make sure it is acceptable. 

 

Part exchange

Where a housebuilder buys the property off the applicant and then re-sells it on the open market. It enables the applicant to sell their existing property quickly so that they can proceed with the purchase of their New Build property. 

 

Leasehold

Each case is taken on its own merits so there is no ‘hard and fast’ rule. Generally speaking, if the leasehold doubles every 10 years or starts at a high point then we won’t lend. If it starts low and has reasonable review increases and periods then we may consider. To help us to come to a decision, we require details of the ground rent and service charge. Solicitors have a duty of care to ensure that any leasehold agreement is not onerous for the customer.

Builders Incentives

We accept builders’ financial incentives on New Build properties up to 15% of a property’s purchase price and up to a maximum of 5% on a property bought using the Help to Buy Shared Equity scheme. The purchase price will not be adjusted for incentives, unless the total amount of incentives exceeds 5% of the price. Incentives greater than 5% will be deducted and lending will be based on the reduced purchase price (unless the property valuation is lower) Here’s an example of how this works for a New Build residential house:

Purchase price of the property

£120,000

Incentives total

£8,000

5% of purchase price allowance

£6,000

Incentives to be deducted from purchase price

£8,000

-£6,000

=£2,000

Reduced purchase price

£120,000

-£2,000

=£118,000

 

Portable and proportionate incentives acceptable in 5% allowance

Incentives such as carpets and curtains, along with financial incentives such as support with up-front costs such as Stamp Duty, legal fees or cashback or enhanced part exchange terms can be accepted in the 5% allowance.

 

Non-standard items that do not need to be included in 5% allowance

Incentives such as an upgraded kitchen or integrated appliances can be accepted as an incentive but do not need to be included in the 5% allowance. However, they do need to be listed on the UK Finance Disclosure Form. There is no requirement to provide the costs of these items. Any item that is provided as part of the standard specification for a property SHOULD NOT be listed on the UK Finance Disclosure Form. However, if an upgrade on the standard specification is offered free of charge, it should be included on the form.

 

UK Finance Disclosure Form

Here is a quick guide to which type of incentives need to be included on the form, if they need to be included as part of the Value of Incentives calculation and the rationale.

 

Incentive type

To be included as part of Value of Incentives calculation?

Rationale

Discount on purchase price

No

The discount is already reflected in the agreed price and does not encourage the purchase to pay more than market value

Financial incentives (as defined in the UK Finance Disclosure Form) e.g. cashback, fees paid, Stamp Duty paid

Yes

The purchaser might pay more for the property than they would without such incentives.

Non financial incentives -  property related fixtures e.g. kitchen upgrade, integrated appliances, landscaping, fitted floor coverings

No

These are reflected in the value of the property and do not encourage the purchase to pay more than market value

Non financial incentives – non property related e.g. free car or property related but moveable e.g. free furniture

Yes

The purchaser may pay more for the property than they would without such incentives

Part exchange

Yes, if the builder is paying above market value for the customer’s property, or covering all or part of the customer’s agent costs

Purchasers may be induced to pay more than market value if they are receiving an enhanced payment for their own property

Help to Buy

  • Minimum 5% customer deposit
  • Authority to Proceed not required
  • Builders’ incentives up to a maximum of 5% accepted
  • Only 1 applicant needs permanent right to reside
  • Remortgages available on a like-for-like basis if a shared equity scheme is remaining in place
  • Consent-to-let for members of HM Armed Forces

To comply with the requirements of the Help to Buy schemes, customers must still fund a 5% deposit themselves. Lending is based on the lower of the purchase price of the property or the property valuation. The Forces Help to Buy loan can be used as a deposit.

 

Help to Buy: Shared Equity

Open to all intermediaries and is available for New Build properties only

Available to first time buyers

Applicants need a minimum 5% deposit that must come from their own funds and not a builders

Government will loan up to 20% of property value

Customers must take a mortgage of at least 25% of the value of the property they are purchasing

Maximum LTV: 75%

It must be the primary residential and only property

Need to apply for eligibility through a HomeBuy Agent in region of desired property

3% of equity loan per year factored into affordability calculation as monthly commitment

Builders’ incentives up to a maximum of 5% of the property value accepted

Where applicant is a member of HM Armed Forces (Regular and Reserve), Consent-to-let may only be approved to enable them to undertake a UK or overseas appointment. This is subject to HCA approval

Consent-to-let not permissible under any other circumstances

Property must be in England

We do not need an Authority to Proceed

Customers can now remortgage to pay off ANY Shared Equity scheme i.e. Help to Buy or builder’s. We do not class this as debt consolidation and up to 90%

Only 1 applicant needs permanent right to reside (the other applicant must have a minimum of 6 months remaining on their visa)

Repayment is by Capital & Interest Only

 

The scheme is available to first time buyers purchasing a new build property, with maximum purchase prices being capped by UK region.

Region

Price cap for Help to Buy homes April 2021-March 2023

North East

£186,100

North West

£224,400

Yorkshire and the Humber

£228,100

East Midlands

£261,900

West Midlands

£255,600

East of England

£407,400

London

£600,000

South East

£437,600

South West

£349,000

 

Help to Buy: London

The scheme is designed to help customers with an equity loan of up to 40% of the purchase price to buy a New Build property in London.

  • Only New Build properties, within the M25, in the 33 London boroughs can be purchased using this scheme
  • Customers and their solicitors are responsible for ensuring the property is within the scheme area
  • Customers must contribute a minimum 5% deposit
  • Customers must take a mortgage of at least 25% of the value of the property they are purchasing
  • Maximum LTV: 75%
  • Maximum property value: £600,000
  • Customers using this scheme can apply for our existing Help to Buy Shared Equity scheme mortgage using the same product code
  • The criteria and application process are the same as the existing Help to Buy Shared Equity scheme
  • Repayment is by Capital & Interest Only

 

Help to Buy: remortgages

  • Customers with a Help to Buy: Shared Equity mortgage with another lender can remortgage to NatWest on a like-for-like basis, keeping the same balance and term. Customers will need to notify the HCA and, if applicable, the developer lender for consent to change mortgage lender.
  • Deed of Postponement administration fee of £115 to the HCA through their scheme administrators (Target)
  • Deed of Postponement fee of £150+VAT (some developers charge £150 for changing mortgage provider) Solicitor's fee of £95+VAT
  • CHAPS fee of £30+VAT (additional £30+VAT CHAPS fee if there are remaining funds that need to be paid back to the customer)
  • If a transfer of title is required to add or remove a party from the mortgage, a fee of £50 is payable to the HCA

 

Help to Buy: Forces (Legacy product)

  • The Forces Help to Buy (FHTB) loan available to Armed Forces personnel, is an interest-free loan repayable over 10 years.
  • It can be used towards the customer’s deposit for the normal Help to Buy: shared equity scheme but the monthly repayment must be included in the outgoings for assessing affordability
  • The FHTB loan may not be used towards the purchase of a second property including a Buy to Let property

 

Help to Buy packaging

 

Please follow our standard packaging guidelines, PLUS:

  • 3% of equity loan per year factored into the affordability calculation for purchase and remortgage as monthly commitment - you need to enter this amount as 3% of the loan divided by 12 on the calculator AND as a 'loan' on the application under 'loan amount'
  • We’ll accept an assisted move as long as the 5% incentive is not exceeded
  • We do not need to see an Authority to Proceed

Offer Extensions

  • Mortgage offers are valid for 6 months, but an extension can be requested within 30 days of the expiry. If granted, we will extend a customer’s offer letter by 3 months. This will be subject to the confirmation of a successful credit search (no additional footprint will be made) and a refreshed property valuation that's free
  • Importantly, the original deal will still be still valid or customers can choose a new deal. This means that if there is a delay in the completion of the property the customer won’t miss out on their chosen deal, which would be especially beneficial if rates rise
  • A customer can apply for a maximum of two offer extensions resulting in a total offer extension period of 6 months. The 3 month extension will apply from the original date the offer expired
  • To apply for an offer extension you just need to complete our declaration form available for download on our website

Quick Summary

  1.  An additional three months extension can be granted.
  2. The original deal is still valid, or customers can choose a new deal.
  3. Refreshed property valuation - at no charge.
  4. No additional packaging is required, unless there is a detrimental change to your customers circumstances.
  5. All processed online via our website.
  6. No additional cost.

Specialist Support

All our BDMs have been specially trained to deal with New Build cases and are well versed in dealing with housebuilders. We also have a dedicated New Build desk that ensures property sales go through smoothly. This service includes:

Day 1 valuations (up to £500,000 mortgage loan) – we will provide customers with a full refund if their applications are declined on the grounds of affordability or credit scoring or where we cannot lend the full amount requested due to affordability issues.

Dedicated New Build underwriting team – experienced underwriters who are able to process applications quickly and accurately. They understand the specific needs of New Build and will contact you directly if any further information on a case is required.

Dedicated New Build BDM Support team – who will track the progress of New Build applications to completion. Your BDM will be able to liaise with the team on your behalf. The BDM Support team will work with valuers and address live issues, provide support by managing urgent cases, assisting with valuation queries and liaising directly with internal teams to resolve any post-submission issues that occur.

You must inform your BDM or BDM team of any new build cases you have submitted that you would like tracked with exchange and completion dates. Speed to offer - we are geared to meet the required speed to offer for 28-day exchange deadlines and it’s possible under some circumstances to do this in just 7 working days to meet New Build deadlines.