IMLA: private housebuilding an urgent priority

Intermediary Mortgage Lenders Association (IMLA) members believe ‘constant’ ministerial reshuffles are negatively impacting government housing policy.

When Gavin Barwell was unveiled as the new Housing Minister in July, he became the sixth politician to assume the role since the start of 2010, following in the footsteps of John Healey, Grant Shapps, Mark Prisk, Kris Hopkins and, most recently, Brandon Lewis.

IMLA is urging Theresa May’s Tory administration to back private housebuilding, social housing and shared ownership in the upcoming Autumn Statement.

59% of lenders say this state of flux has adversely affected the mortgage and property markets, with 42% of intermediaries agreeing. IMLA says a possible solution to the revolving door could be the establishment of an independent, less party-political housing department and 59% of lenders support this concept, with 48% of brokers keen on the idea.

The role of housing minister hasn’t been a Cabinet-level role since being downgraded in 2010, but 52% of lenders think reinstating this status might help. Brokers were more lukewarm on this suggestion, with just a fifth thinking it would make a difference.

In terms of what areas the government should focus its attention on with the Autumn Statement looming, brokers and lenders were united in believing that Theresa May’s new regime will continue to prioritise first-time buyers – despite confirming the closure of George Osborne’s Help to Buy mortgage guarantee scheme.

Both lenders and brokers believe that private housebuilding should be higher up the agenda, with the former reckoning it should be the chief concern. Lenders also identified social housing and shared ownership as key priorities for government support, while brokers are keen to see more focus on last-time buyers.

What brokers think should be prioritised v what they believe will be prioritised by the new leadership:

What lenders think should be prioritised v what they believe will be prioritised by the new leadership

IMLA’s research also shows lenders have greater expectations than brokers that the Bank of England’s Financial Policy Committee will be granted powers of direction in the buy-to-let market by the Treasury. Two-thirds of the former envisage this happening by 2017, while just 38% of brokers expect the same.

Looking at other regulatory issues, the industry has low expectations of Chancellor Philip Hammond reversing the decision of his predecessor George Osborne to reduce mortgage interest tax relief for landlords. Three-quarters of lenders expect these plans to come to fruition, along with 52% of brokers.

While it is widely accepted that increased regulation has been beneficial for the mortgage industry in the wake of the financial crisis, there also is a growing feeling that recent changes may have muddied the waters slightly in terms of where ultimate responsibility lies between lenders and brokers. 59% of lenders and a similar percentage (58%) of brokers feel that the current direction of mortgage regulation has blurred these lines of accountability.

Peter Williams, executive director of IMLA, said: “The government’s lack of clear, structured housing policy has been an elephant in the room for some time now. Successive administrations have made pledges and promises to change this, but it’s never been fully followed through with any real comprehensive long term policy.

“Initiatives and schemes have stimulated bursts of activity and the mortgage market itself has adapted to evolving consumer needs over time, but until such fundamental issues as the continued under-supply of housing, the backlog of unmet demand and the role of different tenures are properly addressed then the same issues will crop up time and again.

“Responsibility doesn’t just lie with the Housing Minister though, and it would be good to see the Chancellor address the housing supply issue further in his forthcoming Autumn Statement. We would also like to see Philip Hammond delay or reverse the tax relief changes which will impact on the rental market and the capacity of that sector to provide homes for those who can’t get into home ownership. However, our member survey shows lenders aren’t too optimistic that this will happen.

“Increased regulation since the financial crisis has been a necessary step to keep the mortgage market on an even keel, but our findings would seem to suggest there is more work to be done on that front. We have come a long way in the 12 years since formal regulation was introduced but despite that the process of introducing more controls continues. It is time to draw this to a close and ask the question of whether regulation has become overbearing and is starting to stifle innovation. The upcoming Competition Review provides an appropriate opportunity for reflection.”