Better Business
The ‘broken’ housing market must be removed from government’s hands – Bamford
Guest Author:
Patrick Bamford, head of international business development at Qualis Credit Risk, part of AmTrust InternationalWe’re approximately a fortnight away from local and mayoral elections which take place in much of England on 4 May.
We can expect the political rhetoric to ramp up in the coming weeks, particularly as this will be the first electoral test for new Prime Minister Rishi Sunak, and will perhaps give us the most significant inkling yet of how he/his party is doing, and what might be coming down the track for the next General Election, which is likely to take place late in 2024.
One would think that housing provision is going to play a significant part in the debate this year and next, particularly as both major parties bid to woo younger voters with their ideas on how they can improve their chances of owning a first home.
A spotlight on housing
Turning ‘Generation Rent’ into ‘Generation Buy’ has long been an ambition for both, and it will be interesting to see how Labour and the Conservatives plan to do this, particularly when we have underperformed in terms of new home numbers for many decades.
To that end, both the Secretary of State for the Department of Levelling Up, Housing and Communities (DLUHC), Michael Gove, and his Shadow, Lisa Nandy, have been in the news over recent days regarding comments on the current state of the UK housing market and what their parties might to do to ‘fix’ it.
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Gove, perhaps unwisely, admitted the housing market is ‘broken’ in a foreword to a book of essays by a Conservative think tank, Bright Blue, which would seem like an open goal to opposition politicians who might want to point out which party has been in government for the last 13 years.
The supply conundrum
While we can, quite rightly, suggest that the problems we now face – most notably, undersupply – have been present many years prior to 2010, you could also argue they have been exacerbated particularly over the past decade.
Nandy responded with such comments but also highlighted Labour ambitions to reach a homeownership rate of 70 per cent if it is elected to government. Interestingly, she highlighted a state-backed mortgage insurance scheme as one of the major ways a Labour government would achieve this and said they would build more affordable and social homes.
The latter, of course, should be a priority, but any government is going to have to go some in order to turn around the ‘tanker’ that is the major housing developers and builders in this country. We have been talking about this for years and there is a big difference between what we really need to see in UK housebuilding, and what has been delivered.
Is more government interference necessary?
Secondly, I’m not so sure Nandy is pushing the right buttons with another ‘go’ at a state-backed insurance scheme. We might want to point out the government’s Mortgage Guarantee Scheme (MGS) has been extended to the end of this year, and it has not exactly set the world alight in terms of lender take-up, most notably because of its cost and lack of flexibility.
The Help to Buy Scheme is now officially over, and the MGS will go the same way at the end of this year. Resurrecting the latter is unlikely to shift the dial significantly further in terms of getting new buyers into homes, particularly if the level of building does not improve considerably.
Would this truly be the best use of taxpayers’ money, not least when firms like ourselves and others offer private mortgage insurance at more competitive rates for lenders, offering more flexibility and no financial risk to the voters at all?
Jumping the hurdles in the housing system
Far better I think to concentrate on the large number of obstacles that are currently in the way of building more homes – not least, our opaque planning system, spurious local objections, lack of infrastructure, developers land banking, etc.
And of course, for the wannabe buyers themselves, there is the issue of high house price valuations, incomes not keeping up with inflation, deposit-saving challenges, and ongoing access to high loan-to-value (LTV) mortgages – which I’m pleased to say have seen something of an improvement since the disastrous mini Budget.
All contribute to a lack of first-time buyer activity, but will need to be tackled in the round rather than a piecemeal, finger-in-the-dyke approach that has for too long been the go-to one for governments of all political hues. It sometimes feels like I’ll be looking for a spot in a retirement village before we get a cohesive housing strategy.
Dare I suggest the establishment of a Ministry for Housing and an attempt at making this a non-partisan issue, because it’s going to need a long-term commitment and approach to solve our ‘broken’ market, otherwise we’re destined to stagger along repeating the problems of the past over and over again.