2017 saw the highest number of first time buyers in the UK since 2006, standing at 365,000. 2017 also saw new build house prices rise by 9.8% across the UK. The new homes and land development market is seriously underestimated by estate agents and mistakenly disregarded as too resource intensive. Strong demand for new housing continues despite Brexit uncertainties. Developers across the country are ferociously seeking out land with new homes development potential. Of the 217,350 dwellings added to the housing stock last year, the greatest increase in delivery comes from new build completion (up by 56 per cent against the post financial crisis low point in 2010-11). With the right tools, agents are perfectly placed to mint this market.
LandInsight surveyed estate agents across the UK to find out why they are diversifying into the Land development and New Homes market. Our findings call for swift action.
Why estate agents are focussing on the Land and New Homes market:
- New and consistent instructions - having 100’s of homes to sell all year round takes pressure off the seasonal slumps. Estate agents can establish relationships with developers that ensure that work done in the land search stage lead to sales instructions for the new homes once they are built. It is no secret that getting planning and building houses takes time. This can seem like a pain in the early days (although there are plenty of quick wins to be had) but in the long term, agents find themselves in a strong position.
- Additional income stream - with sales fees being squeezed by online agents and lettings departments suffering with new legislation, starting a Land & New Homes team can offer a new source of income without huge overheads. With fees to be made on land deals, new homes sales and financial services, there is a lot to be gained by the savvy agent.
- Benefit from government efforts - local councils, housing associations, developers and the government all agree on one thing- we need to build more homes (amongst other things). Government efforts such as the help to buy scheme, stamp duty relief, and overhaul of the planning policy framework have encouraged first time buyers and supported developers in delivering their projects. Estate agents servicing the Land and New Homes market will benefit from these long term strategic efforts on the industry level made by central and local authorities.
How to ensure success in the Land and New Homes market:
- Data driven success - embracing new technologies is crucial. The long and resource draining process of searching for appropriate land for development has been streamlined by technology - PropTech. Advancements in technology for site finding and deal management have made the move into the world of Land and New Homes possible, even for a smaller firm with limited resources. Software like LandInsight has enabled agents all around the country to build Land & New Homes businesses by instantly tracking all the planning activity in their areas, providing quick and easy access to landowners details and much more. Software such as LandInsight is at the centre of their business strategy, allowing them to search for properties with development potential across the country.
- Build up a long term valuable network of contacts - one of the most important factors in establishing one’s business as a Land & New homes specialist is building or growing a network of local developers, land owners and consultants. By immersing their businesses in the world of development, agents started to see the benefits of the ‘network effect’- this took some time but the rewards were well worth the effort in the long run. Furthermore, a lot of Estate Agencies noted that embracing new technology has enabled them to drastically cut down on the time it took to generate these network effects.
Given the potential revenue that a Land and New Homes team can generate and the low overheads made possible by advancements in technology- can estate agents afford to overlook the Land and New Homes market anymore?