At the time of writing, there is plenty of activity on social media about ensuring people have registered to vote. It’s an important democratic right of course and it can get incredibly frustrating when you hear people talk about politics as ‘not being important’ or ‘having little impact on my life’.
Nothing could be further from the truth – politics shapes everything, whether we like it or not, and indeed our future livelihoods, the market we work within, the ability of people to fund home purchases, or to invest, or to make the moves that they need to, are all impacted by the political changes that the next five years will bring.
I was reminded recently of how politics has fundamentally changed one of the sectors that has become so important to the advisory community in recent years, and that’s buy-to-let. A few years back, there appeared to be an inevitable snow-balling buy-to-let mortgage market ploughing inextricably forward – one that had not only got off its knees post-Credit Crunch but was becoming a major sector again.
The ‘success’ of buy-to-let during that period, and the political assumption that this was having a major impact on first-timers’ ability to get on the housing ladder, has fundamentally changed the sector since then. The government of that day wanted to move private rental sector stock back into homeownership hands, and the changes introduced over that period have (arguably) been successful in that aim. Some would suggest too successful given the fall back in buy-to-let purchasing, at a time when a strong supply of private rental housing seems just as necessary as homes for ownership.
Not only did the political path followed back then – and even now – have an impact on the housing market overall, but within the sector we have seen some sizeable shifts as a result. This is perhaps most visible in terms of purchase activity slowly shifting from landlords buying in their own individual names to using a limited company corporate vehicle instead.
The sector has clearly moved in this direction as the latest Moneyfacts statistics on limited company product choice will testify. A year ago, limited company products made up just one in 10 of all buy-to-let products, now it is one five, with the anticipation that – again, particularly for purchasing – these numbers and lending appetite in this part of the market will continue to grow.
And let’s be clear here, this shift is all down to the politics of our time, specifically the policies put in place by David Cameron and George Osborne. Even with Theresa May’s government appearing to suggest a thawing in the ‘anything but private rental sector’ mindset, we still had the introduction of the underwriting changes for PRA-authorised buy-to-let lenders brought in at the start of the year, plus of course we have the further portfolio landlord changes to be introduced at the end of September.
Regardless of who wins the General Election, it’s doubtful that these measures will be pulled back from – this is not social care after all – and there has never been much sympathy for landlords, regardless of who fills the major political posts. Indeed, while a Conservative Party win might mean something of an interference hiatus, perhaps allowing those changes to bed in, there’s no ruling out further moves. In fact, there is already speculation that the fact limited company vehicles are being used more in order to claim the full tax relief on mortgage interest payments, who’s to say that the next government won’t feel this is a loophole that requires closing?
All in all, it’s true to say that politics matters, especially when it comes to the housing and mortgage markets of this country which play such a formidable role in the well-being (or otherwise) of UK plc. One thing we can say, regardless of who it is celebrating in the early hours of 9 June, we can expect more intervention.
Richard Adams is managing director of Stonebridge Group