There’s no doubt in our minds that we are currently in the middle of a political firestorm within the UK housing market, and we are truly seeing the consequences right now of some ‘beyond belief’ policies which have managed to deliver both a home-ownership market and a private rental sector (PRS) which is in no way fit for purpose.
For a Conservative Party which still purports to be the party best equipped to deliver what is best for our housing market, the evidence is stacked high and wide to show any such attempt to prove the quality of its record is, quite frankly, nonsense.
Indeed, increasingly you have to ask the question, what exactly are the Conservative Party attempting to do, what and who are they trying to support, and where does its priorities lie?
In terms of owner-occupation, it has just killed off the one scheme – Help to Buy – which was actually putting first-time buyers in new-build homes, while at the same time it has ditched its 2019 manifesto plan to build 300,000 new homes by the mid-2020s because its back-bench MPs don’t want those homes in their constituencies, while presiding over a period of rampant inflation which impacts everything – rates, lending appetite, building levels, you name it.
This, we should not forget, is the party of Right to Buy, and has agreed to the selling off of more social housing, with seemingly no plan to use any of the money raised to build more houses.
In the PRS it has gone from a party which encouraged individuals to help supply quality properties to tenants suggesting this would a good way to diversify for their retirement, to one which actively introduced a range of policies designed to remove those landlords from the sector.
Perhaps one of the rare strategies that has actually been a success. The problem being of course it was based on a flawed assumption – that first-time buyers would buy the available ex-PRS supply, that the sector could manage very well if this supply was taken out, and if landlords were disincentivised to continue purchasing.
Now, it has resulted in a supply shortage at a time of far greater tenant demand – something the Government also didn’t take into account – coupled with higher rates of borrowing, leading to landlords needing to secure greater rental yield in order to a) secure the finance in the first place, and b) to actually cover the greater mortgage payments they have needed to make.
You would think you’d have to go some in order to alienate both wannabe purchasers, existing owners, landlords and PRS tenants with a range of policies that favour no-one, but the Conservative Party appear to have done this with something akin to consummate ease over the past two to three administrations.
While all this is contributing to huge structural gaps in our housing market, you have Michael Gove – purportedly in charge of our sector – talking about the need for 25-year, long-term fixes, which seems somewhat ironic at a time when rates are at their current levels, but also as if this has not been a discussion countless times over the last two decades and barely registers any interest amongst borrowers because, unless you provide a very short-term ERC period, then why would you want to lock yourself in for such a long period?
Which leads us to 2023, and the market we as advisers are going to have to deal with for the foreseeable future. Certainly, as mentioned, buy-to-let has been thrashed to within an inch of its life, and while residential product options remain fairly plentiful, we’re clearly in a very different interest rate environment to the one millions of people would have encountered last time they sought a mortgage.
Now, no one is suggesting that we could have kept rates at the same, ultra-low levels we were fortunate to have had in the last decade or so. They would clearly have gone up, but what has precipitated the increases has not really been a move to a more stable economic environment, it has been mismanagement of the economy on an industrial scale.
It is perhaps no wonder that the hashtag #GeneralElectionNow trends so frequently on social media, and for the life of us, you can’t help but wonder whether a full reset is needed.
Accusations levelled by the Conservatives that a Labour Government would bring in policies which will deliver greater levels of inflation, or more borrowing, or a greater chance of ‘crashing’ the economy, look increasingly hollow when you consider that this Conservative Government has done all this over the past two to three years, let alone what has played out under it over the last 13.
There will be many reading this who are traditionally sympathetic to the Conservatives, but even they might well come to the conclusion that whatever the alternative they can’t be anywhere as bad as what the UK public has, and is, currently putting up with. And that, in itself, might tell you all you need to know about what is likely to happen when the country does eventually go to the polls.
Rory Joseph is director and Sebastian Murphy is head of mortgage finance at JLM Mortgage Services
