Better Business
Forward planning and focus will protect firms from low supply and purchase levels – Clifford
Guest Author:
Rob Clifford, chief executive of StonebridgeThe housing and mortgage markets have not been short on demand in recent times.
We see the outlook for the rest of 2021 and beyond as positive in our sector, and part of the reason for this are the great swathes of demand that need to be catered for, even in the post-stamp duty holiday period.
It’s not consumer demand we need be concerned about, which is why I did not feel as strongly as some about the benefit of extending the stamp duty holiday and the likelihood of creating even greater demand.
The fact of the matter is that without a greater supply of transactions – both new-build and second-hand – we will find ourselves still confronting issues.
Of course, calls to increase supply are nothing new. They have been coming for the best part of three decades.
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This government announced in its Queen’s Speech in May a Planning Bill introducing partial relaxation of planning laws in order to allow more housebuilding.
What’s interesting is how local communities may react to plans to vastly increase housing supply.
The recent Chesham by-election was won by the Liberal Democrats from the Conservatives. Much of the battle centred on the new Bill and the perceived detrimental impact relaxation of planning law could have on the area, particularly by potentially permitting development on greenfield sites.
It was reported that the Lib Dems made a big play of pushing back against the Bill because this went down well on the doorstep with constituents. If the Lib Dems can achieve political cut through by opposing the Bill in Conservative seats that are targets for them, then it’s guaranteed to be an issue they will keep pushing in other constituencies across the country.
The government might therefore feel the need to review the Bill, if it’s not playing well with core Conservative voters.
Fewer transactions
If that does happen, what will be the chances of boosting housing supply in the numbers that are required? Will we see more focus on former retail units perhaps? And what type of properties would need to be built on those sites to make them alluring to potential homeowners? Are we building enough on the brownfield sites in this country without having to go looking for greenfield locations where housing developments have the potential to generate significant local opposition?
It’s a perennial problem for our market and will clearly impact the number of purchase transactions we see moving through the process. It will also likely add a degree of uncertainty to the sector, especially for advisers who may well have benefitted from high levels of purchase business over the last 18 months.
That said, advisers tend to find a way to generate new business, even if the purchase activity recedes for a period.
Indeed, I imagine advisers are already planning for this slight market rebalance by prioritising remortgage and product transfer activity, ensuring that existing clients are in no doubt about where to return for their advice needs, and diversifying widely to cover off clients’ requirements for protection, general insurance and other relevant services.
Supply, or the potential lack of it, could play a greater role in all our professional lives going forward, but that shouldn’t be a surprise.
With a degree of forward planning and a focus on all the other opportunities that exist, advisory practices should have the tools to ensure this doesn’t negatively impact on their business model.