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Less of the demand-inducing govt housing schemes; supply needs attention – Bamford

by: Patrick Bamford, head of international business development at Qualis Credit Risk, part of AmTrust International
  • 25/07/2022
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Last month I talked about Boris Johnson’s speech on housing and some of the measures that he talked about.

This month, Johnson was forced to step down as Conservative party leader, and by early September we will have a new Prime Minister. How times change. 

The question of course is whether with a change in the individual running the show, whether we will see those housing market announcements jettisoned as a new PM, elects a new cabinet, and we get a new Secretary of State in charge of DLUHC – the Department for Levelling Up, Housing and Communities. 

But what’s that you say? We already have a new Secretary of State. One of Johnson’s parting shots being to fire Michael Gove from the role and install Greg Clark, who may well only be there for the summer, unless the new incumbent to Number 10 wants to look for some continuity. 

It is a very tangled web being wove in the carpeted corridors of Whitehall and its environs, and it is only likely to become more complex as the days and weeks pass. 

 

Housing secretary making a mark 

Which brings us back to the housing market, our new Secretary of State, and whether he is circling in a holding pattern, or he will seek to nail a number of policy landings. 

Interestingly, I’ve already read that Clark has begun to engage with the Home Builders Federation (HBF) no doubt on the ways and means by which supply could be boosted. Something that Gove seemed reluctant to do. 

Not that I wish to criticise Gove. His reputation for ‘getting things done’ was I believe continued with his time at DLUHC, particularly in a number of areas such as leasehold reform, and there certainly appears to be an ongoing and concerted effort to increase the number of first-time buyers coming into the market. 

 

Addressing supply issues 

However, with supply such a key issue in our market, it seems somewhat obvious to have all stakeholders having sensible discussions about what can be done, particularly the HBF and the Secretary of State who are obviously going to play a major role in trying to correct the significant imbalance that exists between supply and demand. 

Even if, as anticipated, the cost-of-living increases and the ongoing impact of rate rises does begin to dampen demand – and there is already some evidence of this starting to take place – it’s still the case that the supply of housing in the UK is nowhere near enough to meet the needs of those wishing to purchase. 

I’m not just thinking of new-build or second-hand properties coming to market for owner-occupiers, but it’s also clear from the significant rise in tenant demand and rents, that there is a severe housing shortage in the private rental sector. Landlords would like to add to portfolios to aid supply in this area, but again this is easier said than done. 

 

Policies fuelling demand 

It makes housing policy a very tricky hand to play for the government, and I’m not so sure that the policies mentioned by Johnson last month, do anything more than simply fuel greater levels of demand, rather than address the supply-side issues.  

What I believe we all have to accept here is that ongoing and never-ending government intervention, which merely stimulates demand even further, has to come to an end. And the industry must effectively – and be allowed to – stand on its own two feet.  

For example, with Help to Buy due to end next year, there may be a temptation to provide it with a further stay of execution however this should be resisted. The industry, for example, has worked hard on a range of initiatives including Deposit Unlock, which will help fill that gap and help first-time buyers onto the ladder, and it will not come at any cost to the UK taxpayer, who I feel is suffering some degree of fatigue in having its money used in this way. 

Government support for industry initiatives and solutions is far more acceptable than government schemes, and in a marketplace which seems to have enough demand, there appears no need to pursue policies which merely accentuate the imbalance with supply. 

Far better to focus government resources on supply, and let the industry do its bit to help individuals into these homes.  

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