The mood (unsurprisingly) was almost overwhelmingly positive at the recent post-Election Great Housing Debate – this, it has to be said, was much to do with the fact that 99% of the attendees were housing market stakeholders. A Conservative Party majority, however slim, was seen by nearly all as the best result possible for the market given the expectations this government will be far less interventionist than its main opponent(s) were threatening to be.
That said there were some dissenting voices suggesting this positivity would only provide a short-term boost to those who already have their own home, rather than helping the housing market in general or indeed those who are not yet on the property ladder. Understandably, the audience and experts were most concerned about how the necessary increase in housing supply would be delivered and there were real worries that, over the next five years, we would still be unable to build the number of properties that are truly required in order to fill the housing gap.
So, while the stock market appears to have suggested this was a pro-house builder, pro-estate agent, pro-lender General Election result, there is still much to consider especially given the fact that the housing market is going through tremendous change at present. I would even go so far as to say this is a level of change not seen perhaps since 1975, when the 1974 Rent Act kicked in – essentially this is a once in a lifetime occurrence.
This is partly to do with a larger private rental sector but also the ongoing problem of not having a cohesive social housing strategy, compounded by a lack of housing stock. The government’s Right to Buy extension for housing association tenants is likely to hit supply even further, although it suggests those homes taken off the social housing market will be more than replaced by new builds. I am cynical of such a view and somewhat suspicious that we will get anywhere near the level of affordable/social housing to replace what will be lost.
However, I am also conscious that I do not wish to pre-judge the effort this current government will put into increasing housing supply. Improvements may well be made but how is it to achieve these increases? For example, will it be willing to be more interventionist in areas such as planning, building on green field sites, and discounting local NIMBY-ism in order to get the numbers up? I’m unconvinced however this is exactly what will be necessary in order to get close to their targets. And if intervention is warranted here, might we also expect a more interventionist approach across the board? Far greater than what might be normally anticipated from a Conservative government?
We have talked much about ‘regulatory creep’, particularly in the mortgage market, in recent years and perhaps we should be braced for more ‘political creep’ when it comes to the future of the housing market. Indeed, as far as the PRS is concerned the government might well feel that a certain level of greater intervention is warranted. Perhaps our sector will not be off-limits over the next five years?
It is truly a case of wait and see at present – what we do know is that the Conservative Party has a relatively strong mandate to deliver their housing market manifesto pledges, which means by 2020, we can expect 200,000 new starter homes, housing zones on brownfield sites, the introduction of Right to Build, the start of the Help to Buy ISA, ongoing support for Help to Buy 1 and 2, and the extension of Right to Buy.
Whether this is enough to satisfy all areas of the housing market is a moot point. However, one thing seems certain, as time moves on there will undoubtedly be ongoing pressure to intervene more and far greater focus on the ability of this government to bring about a fit-for-purpose housing market than ever before. Good luck with that.
Bob Young is chief executive officer of Fleet Mortgages
