You might not think it possible but there will probably be more words written and talked post-General Election then there was during the campaign itself. The post-mortems have already begun for the losing parties, while the Conservative victors will be celebrating for some time to come and looking forward to, what we can probably best describe as, a full and frank implementation of their Manifesto policies. As many have pointed out if we thought the last five years involved the Conservatives pursuing their agenda, then (shorn of the Liberal Democrats) we ain’t seen nothing yet.
In terms of the mortgage and housing market, perhaps unsurprisingly, the mood amongst stakeholders has been pretty positive. You only needed to look at the share prices of listed banks, estate agents, property portals and house builders the day after the polls closed to see who the market thought the big winners were likely to be following David Cameron’s return to number 10.
Part of this mood of optimism stems from a perception that the Tories will be far less interventionist in the housing market than their opponents would have been. Much political breath was expended on such issues as the introduction of a Mansion Tax, delivering rental controls and caps, increasing long-term rental tenancies, the abolition of letting agent fees, etc, – but none of these are Conservative policies and are therefore highly unlikely to ever reach the statute book.
For a policy such as the Mansion Tax, the fact it won’t be part of the next Government’s legislative programme will be a huge relief, particularly for those advisers, agents and lenders active in the high-end property market. Were such a policy to have been introduced this would undoubtedly have skewed the market at the top end and produced a very noticeable change in behaviour – very similar in fact to what we had with the previous ‘slab’ stamp duty structure. The progressive changes to stamp duty, introduced last year, have done much to iron out these threshold discrepancies but a Mansion Tax would have reinstated them.
However, judging by the headlines generated over this post-Election weekend there has already been far greater interest in the £1.5-2m-plus property market than in recent months and this must be fuelled by a greater confidence about what isn’t coming over the horizon.
In all of this, the word confidence plays an incredibly large part. Again, prior to the Election there were a number of surveys suggesting that both residential and buy-to-let purchasers were willing to sit on their hands before making any further purchases until the result of the Election was known. One would have expected a boost in activity with any result, regardless of the identity of the winning party, but now we have the Conservatives in with an overall (albeit slim) majority the boost is likely to be that much higher. A decisive result is preferable to all stakeholders, especially when coupled with the fact that we do not have to endure drawn-out negotiations and horse-trading over who forms the next Government.
Activity levels should therefore rise in the months ahead – traditionally a strong time for the mortgage and housing markets anyway – plus we may get a further boost from policies such as the introduction of Right-to-Buy for housing association tenants as they seek to purchase their own property.
However, the overwhelming priority, as many have pointed out, has to be boosting overall housing supply across the country. This, of course, ties in with Right to Buy because unless this is more than matched by building new homes, we are going to see more homes taken out of the overall supply pool. We need vast increases in property numbers for both ownership, and crucially, for rental tenants over the next five years if we want to get anywhere near filling the ‘housing gap’. The Conservatives have pledged to build 200,000 more starter homes by 2020 and this would be a start but we need a long-term plan to try and get close to this figure every single year. We are already some way short and the major house builders have said it may be unachievable but there should certainly be a commitment, at the very least, to get the numbers up, and up quickly.
Up until now the focus has perhaps been more on stimulating purchase rather than supply activity – with the introduction of Help to Buy, for example – and there must continue to be action in order to maintain the level of high LTV loans, however the fundamental of building homes has to take priority. As far as the housing market is concerned, this new Government is likely to be judged fully on its ability to generate activity in this area – I think that we would all hope it tackles this head on and delivers over the next five years and establishes a foundation that can be built on for much, much longer.
Richard Adams is managing director of Stonebridge Group
