New-build homes continue to attract buyers in 2025, from first-time purchasers seeking energy efficiency to downsizers prioritising low-maintenance living. Developers have intensified incentives—offering stamp duty support, furniture packs, service charge holidays and staged payment plans—to keep sales momentum as rates fluctuate and economic confidence remains mixed. Yet the lending landscape around new-build properties has also tightened, meaning buyers must navigate more rules, more scrutiny and more valuation caution than at any point in the last decade.
Lenders in 2025 are increasingly aware of price volatility in new-build markets, particularly where incentives artificially inflate purchase prices. As a result, banks apply lower maximum loan-to-values (LTVs), stricter affordability tests and more conservative valuation assumptions for both flats and houses. Buyers who enter the process unprepared often face last-minute finance issues, shortfall valuations or delays that threaten exchange deadlines.
Willow Private Finance regularly supports clients dealing with these challenges, especially those seeking to align developer timelines with lender requirements. Buyers researching broader areas of the market—such as
how to choose the right mortgage broker in 2025 or navigating tools like
mortgage valuations—will find many of the same pressures apply even more acutely to new builds.
In this guide, we explore how new-build mortgages work in 2025, the impact of incentives on valuations, the key risks buyers overlook, and the strategies that help secure finance smoothly—particularly for higher-value or more complex purchases.
The 2025 Market: Why New Builds Are Under More Scrutiny
The new-build sector has historically been sensitive to economic cycles, and 2025 continues this pattern. With construction costs high, buyer incentives widespread, and developers eager to maintain pipeline liquidity, lenders have intensified caution. This is especially true in areas where similar units compete for the same pool of buyers, creating a risk of price stagnation or downward pressure.
Lenders are particularly wary of the “new-build premium”—the initial uplift in price that often declines in the first few years as the property becomes “second-hand.” Even high-quality schemes in London, Manchester and regional hubs are not immune. Banks now review comparable evidence more critically, often ignoring developer-provided comparables if they include incentives that distort the true market value.
These concerns drive lenders to reduce LTVs, especially on new-build flats. Even buyers with strong income and clean credit may find they qualify for a smaller loan than expected. Understanding how these dynamics influence borrowing is essential before committing to a reservation fee or exchange deadline.
How New-Build Mortgage Lending Works in 2025
Lenders typically impose stricter criteria on new builds than on second-hand homes. This includes lower LTVs, increased documentation requirements, and more detailed scrutiny of the sale contract and development status.
For houses, 85–90% LTV may still be achievable, but for flats, many lenders cap at 75–80%—a response to higher perceived market risk, construction delays and valuation uncertainty. Private banks may offer more flexibility if a buyer’s wider financial circumstances justify it, but they will scrutinise the property’s build quality, developer reputation and long-term liquidity.
Most lenders also require the property to be fully habitable, structurally complete and covered by an approved warranty. They examine planning documentation, new-build warranties such as NHBC, LABC or Premier Guarantee, and sometimes request confirmation of service charge budgets—especially where amenities or concierge services increase long-term costs.
Buyers must also be aware of expiry dates on mortgage offers. New-build purchases often span longer build timelines, so offer extensions can become critical. While some lenders permit extensions, others require re-underwriting, which can be problematic if rates rise or personal circumstances change. This makes lender choice and early preparation vital.
Developer Incentives: Attractive but Complicated
Incentives are widespread in 2025. Developers use them to maintain momentum, especially as mortgage rates remain volatile. While these incentives can reduce upfront costs, lenders often exclude them from valuation calculations if they believe they artificially increase the headline price.
Common incentives include:
- Contributions toward stamp duty
- Furniture packages
- Cashback on completion
- Legal fee support
- Upgrades, flooring or landscaping
- Service charge holidays
- Vendor-paid deposit contributions
Valuers typically assess the property’s “unaffected market value”—ignoring incentives that do not reflect genuine market price. If the valuation comes in lower than the agreed purchase price, a shortfall arises. Buyers who have committed to exchange with limited liquidity often face stress, renegotiations or even the risk of losing their deposit.
This issue is particularly common in prime new-build schemes, where luxury amenities inflate service charges and create ongoing affordability concerns. Our clients who navigated
prime central London valuation gaps will recognise similar dynamics—just applied through a new-build lens.
Understanding how incentives are treated is essential before signing a reservation agreement.
Snagging, Warranty Issues and Build Delays
New builds offer modern design, energy efficiency and long-term cost benefits. But they also come with unique risks that influence lending decisions.
Snagging—the process of identifying defects—has become more important as build speeds increase. From cosmetic issues to functional faults, snagging lists can run long, particularly in high-density or rapidly delivered developments. Some lenders even require confirmation that snagging issues do not materially affect habitability or structural integrity.
Warranty coverage is also closely examined. Approved structural warranties, typically for 10 years, must come from recognised providers. If warranties are incomplete, non-standard, or from unapproved issuers, lenders may refuse to lend entirely.
Build delays pose further risks. Developers often provide estimated completion dates that shift due to supply chain issues, labour shortages or regulatory inspections. Buyers relying on mortgage offers with standard validity periods must either request extensions or reapply entirely—both of which can create cost implications.
Why New-Build Valuations Can Be Challenging
Valuations in new-build schemes are shaped by clustering, comparable scarcity and the potential for incentives to distort pricing. When multiple units are released simultaneously, valuers sometimes struggle to establish genuine market comparables. If the scheme has only recently launched, the lack of historical sales reduces certainty.
Lenders will not rely on developer-provided pricing alone. Independent valuers must justify their figures based on locally achieved prices, even if those units differ slightly in specification, layout or floor level. This creates conservative valuations, particularly for early-phase buyers.
In high-value areas or schemes with premium amenities, lenders may apply further caution due to rising long-term service charge obligations. Buyers familiar with our guide on
high service charges in PCL will recognise this theme.
Buyers should expect valuations to take the lower end of reasonable evidence, especially in areas with significant pipeline supply.
Strategies Buyers Use to Secure Better Outcomes
Success in new-build purchases often comes down to preparation and lender selection. Buyers who begin their mortgage process early secure more favourable offers and reduce the risk of expiry issues. Choosing lenders with longer offer validity periods is particularly useful for off-plan purchases.
Another strategy involves modelling borrowing capacity with and without incentives. If the valuation excludes an incentive, buyers must understand in advance whether additional liquidity may be required. Willow’s modelling in this area is especially detailed, helping clients understand risks before committing to exchange.
Some buyers also consider private banks, which may take a more holistic view of wealth. For buyers with investment portfolios, business ownership income or foreign currency earnings, lenders that offer more flexible underwriting—as explored in our blog on
private bank lending—can produce superior results.
Finally, professional snagging surveys and legal reviews are vital. Lenders rely heavily on solicitor reports to confirm warranty validity, planning compliance and viability of the service charge budget. Early scrutiny minimises last-minute complications.
Hypothetical Expample: A Buyer Facing a Valuation Shortfall
Consider a buyer purchasing a new-build flat for £575,000 with a 10% developer incentive in the form of stamp duty support and upgraded fixtures. The lender’s valuation comes back at £550,000, ignoring incentives. This reduces the available loan and increases the buyer’s required deposit by £25,000.
If unprepared, the buyer may be unable to proceed, risking the reservation fee and causing stress. However, by modelling outcomes in advance, restructuring incentives where possible and exploring specialist lenders comfortable with the scheme, the deal can often be saved.
This type of scenario occurs frequently in 2025.
Outlook for 2025 and Beyond
New-build lending will remain conservative until economic conditions stabilise. Developers will continue offering incentives to maintain sales, and lenders will continue scrutinising those incentives. Buyers should expect cautious valuations, stricter documentation requirements and heightened interest in long-term affordability.
However, as energy efficiency becomes more central to buyer demand, some lenders will introduce enhanced criteria for sustainable developments. Schemes that outperform EPC standards or integrate renewable infrastructure may receive more favourable treatment in the coming years.
The combination of shifting regulations, evolving lender appetite and developer strategies means that buyer preparation and professional advice have never been more essential.
How Willow Private Finance Can Help
Willow Private Finance supports new-build buyers at every stage—from reservation to mortgage offer to completion. Our whole-of-market access includes high-street lenders, specialist banks and private institutions, giving clients the flexibility to navigate valuation issues, incentive structures and long build timelines.
We guide buyers through developer negotiations, advise on offer validity, structure borrowing to minimise valuation risk, and identify lenders whose policies align with the specific development. For clients purchasing high-value units, off-plan homes or properties with complex amenities, our in-depth modelling ensures the entire finance strategy is robust from the outset.
Frequently Asked Questions
Q1: Why are new-build mortgages harder to secure in 2025?
A: Lenders are cautious due to valuation issues, developer incentives and market volatility, leading to stricter criteria and lower LTVs.
Q2: How do incentives affect valuations?
A: Valuers typically exclude incentives from the assessed value, which can create shortfall risks for buyers.
Q3: Can mortgage offers be extended if the build is delayed?
A: Some lenders allow extensions, but others require full reassessment. Early planning is essential.
Q4: Do all lenders offer the same maximum LTV on new-builds?
A: No. Many cap new-build flats at 75–80% LTV, while houses may reach 85–90%.
Q5: When should snagging be done?
A: Shortly before completion and again after moving in, especially if issues impact habitability.
Q6: Are private banks more flexible for high-value new-build purchases?
A: Often, yes. Private banks may rely more on asset strength, liquidity or global income.
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