The UK housing market is under constant scrutiny, especially when it comes to bolstering the supply of affordable housing.
The government’s recent announcement of a bold new National Housing Bank, backed by £16 billion in financial capacity and tasked with unlocking over half a million new homes, signals a renewed effort to address the long-standing supply shortage and affordability crisis.
This new approach, delivered via Homes England, aims to attract over £53 billion in private investment by offering government guarantees, long-term infrastructure finance and support for SMEs.
It represents a welcome shift and one that acknowledges the scale and complexity of the challenge, in addition to the need for both public and private collaboration to effect lasting change.
PRACTICAL SOLUTIONS REQUIRED
Yet as promising as these top-down initiatives are, they must be matched with practical, flexible solutions at the delivery level. That’s where schemes like Discount Market Value (DMV) housing come in, and where lenders have a crucial role to play.
DMV schemes are already helping local people buy homes at below-market prices, often through Section 106 agreements between developers and local authorities. Typically, these schemes require the buyer to be from – or work within – the local area, offering discounts of up to 30% and preserving long-term affordability through equity retention by the local authority.
However, while the homes may be more affordable on paper, many would-be buyers still struggle to meet the lending requirements. That’s where lending criteria becomes the make-or-break factor.
WILLINGNESS FOR FLEXIBILITY
It’s all about incorporating a willingness to balance responsible lending with real-world flexibility and meeting borrowers where they are. That means recognising the growing number of applicants who are self-employed, on fixed-term contracts, relying on a mix of income sources or those with current or historic credit issues.
Focusing on the latter, many mainstream lenders rely on credit scoring, which can exclude applicants with even minor credit issues – regardless of overall affordability. By contrast, others, including The Loughborough, take a more flexible approach, using credit checks rather than scores to assess cases involving defaults on mail order accounts, utility bills, or telecoms contracts. Even if those defaults remain unsatisfied.
We’re also open to deposits being gifted, removing yet another barrier for buyers who may have the income to support a mortgage, but not the ability to save. This is especially relevant in the DMV space, where a 5% deposit is required.
DMV homes, though still relatively underused, align well with efforts to support local living, affordable ownership, and stronger community connections.
With new support for SME developers and more routes to bring forward difficult sites, DMV-style propositions are likely to become more common.
Ultimately, it’s not just about building more homes, but ensuring those homes are within reach of the people they’re intended for. With the right financial infrastructure and growing awareness, DMV could evolve from a localised policy tool into a key component within the national housing strategy.
For brokers, it’s an opportunity worth exploring, especially for clients seeking practical, affordable ways to get on the ladder. Even for those with varied credit histories.
