We want to make life 'easier' for people buying new-build homes, says Own New founder

Eliot Darcy, founder of Own New, has said the company is looking for “ways we can make life better or easier for people when they’re buying a new build”.

Own New’s Rate Reducer takes housebuilder incentives, which are used to top up somebody’s deposit or help with stamp duty payments, and invests them into the mortgage to allow lenders to offer lower monthly mortgage rates.

As an example, Virgin Money offers an Own New Rate Reducer using a 5% incentive priced at 0.35% for a two-year fixed rate at 60% loan to value (LTV) and 2.35% for a five-year fixed rate at 60% LTV. The deals come with a £995 fee and £250 cashback.

“Monthly cost is a big issue for people, not just when interest rates are high, as it doesn’t look like rates are going to go down to where they used to be. It’s a problem for people and people want lower monthly payments, and ultimately, that’s what Rate Reducer does,” he said.

Own New launched around six months ago with its Rate Reducer product, and since then, it has got six lenders on board – Virgin Money, Halifax, Perenna, Furness Building Society, Darlington Building Society and Leek Building Society.

Darcy said it is looking to add another two lenders to the Rate Reducer product, including a specialist lender.

“The strategy for new lenders isn’t about: let’s go get the biggest lender. This is very genuinely about the customer. We try to make everything customer-focused. All of our thinking is the customer.

“We really believe that if we keep doing that, then the rest will come. If we’ve got the right solution for the customer and have their best interests at the heart of the product, then we can continue to grow and work with every housebuilder and new-build broker across the country,” he said.

Darcy explained that each lender filled a certain customer gap. For instance, Virgin Money and Halifax were “great for prime customers”, Darlington Building Society can help people with visa requirements, Leek Building Society offers 95% lending on new-build flats and Furness Building Society has great rates at 95% LTV.

“Basically, with a customer focus, we’re just trying to make sure that anyone who wants to buy a new-build property can do so through Rate Reducer,” he said.

New-build incentives reward buyers

When asked about the prevalence of builder incentives, he said it varied developer by developer, and for larger firms, it could vary by division.

“Developer incentives are a great way to help first-time buyers and homemovers buy a home with a little added reward that the resale market doesn’t have. They do a good job in helping buyers and our reason for being is just to use that in a different way that we think is beneficial to the customer,” he noted.

He said that incentives could become fewer as the market improves but then heightened competition between builders could also increase this, meaning there were a lot of different crosswinds to consider.

Darcy said Own New had around 150 builders live at the minute, adding that since it was “inundated” at launch, it had to “put new builders on hold for a while”.

“For the builders, it’s just another tool in their toolkit, it’s another way that they can help their customers. It’s a no-brainer really,” he said.

Getting brokers up to speed

Darcy said: “Broker-wise, we have a training programme to ensure you know that everyone’s getting the right kind of advice. We’ve had more than 2,000 brokers go through that process, so that’s great.”

He said the company was working with lenders to make sure that brokers who come on board are experienced, with knowledge of new-build incentives and how it works.

“We want to ensure that the broker firms that do this have experience in new build. There’s a couple of ways we can do that: either the builders, lenders can tell us these are new-build guys, or we look at a big database, and when a broker applies, we can check back to that.

“I think we’re in a place now where the majority of the new-build world, in terms of brokers, knows about us and are on board, or are getting on board. If anyone else comes along, then they can apply to work with us on the website, and if they can demonstrate they have the new-build experience, then they go through an onboarding process and training. Once they’ve completed the training, they get access to our broker toolkit, which makes it dead easy for brokers to process these mortgages.”

For brokers, the training can be done really quickly, and Darcy said this took half an hour.

He continued: “We are focused on getting everything right in the middle so that it is fit for purpose, and it works really well for, ultimately, the customer, but that means it has to work for the broker, the builder and the lender.

“That’s what we’re doing at the minute, and we’re also just plugging in lenders where the criteria requires. That’s absolutely the focus and all we’re thinking about right now.

“In terms of growth, we can do Rate Reducer in different markets as well, so buy to let BTL is a good example. It works really well with shared ownership as well.”

Darcy said when developing new products, Own New would be led by propositions that are “customer-focused” and named affordability and deposit as potential areas of interest.

Government plans for new build

When asked if the momentum for new build was growing, particularly as the government announced plans to develop one-and-a-half million homes, Darcy said if the plans for planning reform were realised, it would enable builders to go forward with delivery.

Otherwise, he said he was a “big fan of believing the private sector can do all this stuff, so anything that needs to be done can be done by the private sector”.

“People find a problem then try to find a solution,” he added.

Darcy said all the government needed to do was “remove any blockers”, then schemes like Rate Reducer can help people to buy the houses once they’re built.