Most buyers cannot get a mortgage, says house builder

Mortgage availability – or its lack – is causing the single biggest problem in the housing market.

House builder Ian Baker, managing director of Galliford Homes, said that out of a group of 50 people who wanted to buy one of his houses, just nine received approvals.

Normally, he said at last week’s Great Housing Debate, the figure would be 41 out of 50.

Peter Rollings, of London agents Marsh & Parsons, said that housing transactions were still 55% below their peak but that the mortgage drought was less of a problem in the capital. “Around 63% of our buyers pay in cash,” he explained.

Baker, an eloquent speaker at the event arranged by PR company Wriglesworth, said there were massive problems for housebuilders. He admitted that he, like other developers, had built “inappropriate products” and contributed to the over-supply of city centre apartments. “Purchasers voted with their feet. People just didn’t aspire to living in high-rise inner-city flats,” he said. “I’m guilty as charged. We were under a lot of pressure from the Government to increase density on brownfield sites, but you also have to do what is best for a healthy society.

“People want houses that are spaced apart and with gardens. But it is getting harder and harder to do that, and a real challenge for developers. By 2016, we will all have to build zero carbon homes, but that comes as a massive cost and would only be possible if there were negative land values.

“Having an economic building industry will be severely tested,” he warned. “I am all for saving the planet, but there are conflicting agendas.”

HIPs were also discussed briefly at the debate. Baker said they added no value and were bureaucratic, but David Newnes, managing director of Your Move, said: “HIPs have not been a barrier to sellers entering the market – that’s a bit of a myth.” He said they had speeded up transaction times but not had any effect on fall-through rates.

John Heron, managing director of Paragon Mortgages, said the way that HIPs had been imposed on the industry appalled him. “At best they have been irrelevant, and at worst, they have distorted the process. We should have gone down the e-conveyancing route.”