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New Build Indemnity scheme

The Prime Minister has today (21 November 2011) announced that the Government will provide a guarantee for up to 100,000 new mortgages at up…

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Prime Minister has today (21 November 2011) announced that the Government will provide a guarantee for up to 100,000 new mortgages at up to 95 per cent loan to value for new build properties in England. The scheme will be led by the Home Builders Federation and Council of Mortgage Lenders.

The new build indemnity scheme will deliver both a significant increase in housing supply, and access to affordable mortgages for those without large savings who wish to purchase a new home.

The scheme will be open to all builders and all lenders operating in England who wish to participate. The scheme will apply to all new build properties, both houses and flats, and will be available to all potential buyers, subject to appropriate underwriting criteria. Mortgages will be available under the scheme from March 2012.

The Government can confirm today that the following major lenders have agreed in principle to participate in the scheme: Barclays, HSBC, Lloyds Banking Group, Nationwide, RBS, Santander and Yorkshire and Clydesdale Banks.

These lenders make up over 80 per cent of mortgage lending in the UK.

The Government can also confirm that over 25 home-builders have agreed in principle to participate in the scheme, including the three largest Barratt, Persimmon and Taylor Wimpey (full list at end).

These house builders provide over 60 per cent of new homes in the UK.   

The Government hopes that other lenders and builders will also want to participate in the scheme.


Borrowers will now have access to mortgages of up to 95 per cent loan to value at affordable rates on new build homes from participating builders.

The scheme will be available to all potential buyers, except buy-to-let investors or second home owners.

The process for agreeing these mortgages will be the same as for any other mortgage. From the borrower’s perspective, this is a ‘normal’ mortgage, with no equity loans or second charges.

For each new build property sold under the scheme, the home builder will contribute 3.5 per cent into an indemnity fund, with the Government supporting the fund to a total of 9 per cent of the property value.

The indemnity fund pays out to the lender if a property financed under the scheme is repossessed and there is a shortfall. Builders will take the first loss in the indemnity, with Government only being called upon to pay once the builder’s fund has been exhausted.

Lenders and builders will retain the right to decide which builders and lenders they wish to engage with, according to their own commercial judgements.

The Government will establish a delivery group of lenders, builders and Government to meet on a regular basis to monitor the practical implementation of the scheme.

There will be a cap on the value of properties eligible for inclusion in the scheme.

The scheme will be delivered by the Department for Communities and Local Government and will be available in England only.

The Government will conduct an evaluation of the scheme after two years, to ensure that there has been an appropriate and positive effect on the demand and supply of new build properties.

Current list of house builders

  • Barratt Developments PLC
  • Crest Nicholson PLC
  • McCarthy and Stone Retirement Lifestyles Ltd
  • Bellway PLC
  • Fairview New Homes Ltd
  • The Miller Group Ltd
  • Bloor Homes Ltd
  • Galliford Try PLC
  • Persimmon PLC
  • Bovis Homes Group PLC
  • Gladedale Group Ltd
  • Redrow PLC
  • Taylor Wimpey PLC
  • Antler Homes Ltd
  • Grainger PLC
  • Stewart Milne
  • Aquinna Homes Ltd
  • Jones Homes
  • Places for People Group
  • Banner Homes Group PLC
  • Morris Homes Ltd
  • Strata Homes Ltd
  • CALA Group Ltd
  • Nicholas King Homes PLC
  • Urban Renaissance Villages Ltd
  • Croudace Homes Group
  • Octagon Developments Ltd
  • William Davis Ltd
  • Heyworth Developments Ltd


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Published 21 November 2011