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Keep the innovation coming, please

by: Alison Beech
  • 05/04/2011
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Keep the innovation coming, please
In the headlines over the last few weeks, we’ve seen several lenders announcing their re-entry into the buy-to-let market and others improving product and underwriting criteria.

The Budget also promised £250m for the FirstBuy scheme, launched in conjunction with house builders in September, together with some taxation and planning changes.

These are all steps in the right direction, but not the giant leaps really needed to improve the UK property market.

The FirstBuy scheme is restricted to new build properties and it’s estimated that only around 10,000 first-time buyers will be helped. It is disappointing that the help is only focused on new build, for which most lenders have a limited appetite.

Whether this move was aimed at helping first-time buyers rather than appeasing house builders is questionable, particularly when promised improvements to the planning procedure will primarily benefit developers.

The relaxation of the planning process will make it easier for some commercial property to be converted to residential. This may help to relieve some of the pressure on commercial landlords stuck with empty office and shop space as well as increasing rental stock, or perhaps even affordable homes to buy. All positive moves, but with limited impact.

Shortage of stock in major conurbations is putting upward pressure on rents, with a danger that those on low incomes are not only excluded from home ownership but are finding it increasingly difficult to secure affordable rented accommodation.

The Budget also provided a bit of good news in this area, as professional landlords and institutional investors will benefit from a change to Stamp Duty taxation and its application to bulk sales.

The hope is that this will encourage investment by institutions, such as pension funds into bulk buy to let, increasing supply which may in turn soften rents in some metropolitan areas.

Everyone needs a roof over their head. Perhaps the difficulties facing home searchers will act as a springboard for innovation or maybe we’ll look to the past where house sharing and lodging were more prevalent, and benefited both parties. The lodger gets an affordable home and the landlord receives a welcome contribution to household income.

Mortgage brokers, financial advisers, estate and lettings agents and builders can make a valuable contribution by helping current and would-be landlords, first-time buyers, renters, and existing homeowners to find creative ways to achieve their goals, and I think we will start to see some real innovation from this community.

It would be great to see some partnerships forming between the various constituent parts – lenders, intermediaries, property professionals, house builders and trade bodies – to help recreate our market.

It is plain to see that the government’s attention (and money) is elsewhere and lender capacity remains constrained for all sorts of reasons. We can wait around for something to happen or we can ask “what can I do?”.

Alison Beech is business relationship director of Valunation

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