There’s a growing tension in the housing market between building homes and building places people actually want to live in. Too often, homes go up long before the schools, green spaces, GP surgeries or bus routes that make a neighbourhood feel complete.

It’s a gap that’s easy to overlook on a spreadsheet, but it matters to buyers, communities, and increasingly to lenders.

Valuing homes in under-developed neighbourhoods has always required a more nuanced approach and in today’s market, that’s more vital than ever. Missing infrastructure like schools, green space and local retail can significantly impact an aera even for high-spec new builds.

These gaps don’t just affect pricing; they undermine the long-term appeal of a development as buyers realise the lifestyle promise doesn’t match reality. From a lender’s perspective, on new build developments its important homeowners have access to good location amenities, road and rail network infrastructure, ensuring we build homes where people want to live.

Risk doesn’t end after the build

Delays to local amenities due to funding issues, planning lags, or developer pullbacks can persist long after the home delivery in a community is technically ‘complete’. That hold up impacts resale values and increases the likelihood that borrowers will feel stranded, especially as household budgets tighten.

Government schemes like the 95% mortgage guarantee were well-intentioned to support market access, but in today’s environment, they often shift risk rather than mitigate it, particularly in areas with weak infrastructure and limited long-term demand. For lenders, this isn’t just a question of upfront affordability.

It’s about portfolio exposure to default risk, falling values in less connected locations, and the drag effect of energy-inefficient housing stock. High-LTV lending must account for broader sustainability metrics, including EPC performance, retrofit potential, and the impact of future regulatory tightening, including the Future Homes Standard. All of these elements will shape the durability of borrower affordability and asset value over time.

Ultimately, unlocking sustainable supply means aligning location strategy with liveability outcomes. For lenders, this is about more than underwriting a mortgage – it’s about forecasting a community. At the point of purchasing a new build, the location could be promising at first but could eventually leave a person in negative equity and unable to sell if the location overall fails to realise its potential.

The most resilient portfolios will be those where homes aren’t just affordable, but actually desirable five, ten, or twenty years down the line.

Trudy Woolf is director of lender services at e.surv Chartered Surveyors