Housing supply came firmly into focus on the Friday after the Budget when the government announced its planning reforms. It would appear that these plans are an attempt to give councils and the NIMBY brigade a kick where it hurts and if they are not willing to pass housing developments quickly and efficiently, such power will be taken away from them and will also be fined for their trouble. Brownfield developments are the core focus of this and one can anticipate that the government is not going to want to be hoisted by its own petard in five years’ time when it comes to hitting the number of new homes/first-time buyer targets it set itself.
There are of course a few issues with any housing supply or planning policy, firstly, the ability of house builders and developers to actually build the new properties. Yes, it is good news if land becomes available more easily and quickly, but the homes still have to be built and, it’s fair to say, that even the big players in the UK are not currently anywhere near the level of capacity and resources required to get these new homes up and ready.
Earlier this year, the builders themselves said as much and with the demise of the small to medium-sized operators post-credit crunch such planning reforms might still not be enough. We shall have to wait and see but the government might respond that it is now doing all it can to enable the builders and developers to have the land they need and to get cracking. The numbers however might still not stack up within five years.
All this focus on housing supply is of course something of a moot point because, in the case of first-time buyers in particular, it is predicated on there being sufficient finance available to them to buy these properties. And for many people, the supply of high LTV mortgages will be absolutely critical. Second and third-steppers will also want to buy new-builds which will subsequently free up their homes for those below them on the ladder, will we have the necessary low-deposit mortgage supply to enable this to happen? If we have a move from state to private mortgage insurance, with sufficient incentives remaining for lenders to maintain activity in this market space, then the answer is yes. If not, then we might be looking at a potential cliff-edge over which high LTV mortgages might fall.
Undoubtedly, this feels like a very important time for the housing and mortgage markets – indeed, it seems like a pivotal moment. One which is likely to shape the future direction of our market for many years to come – there is certainly an opportunity to be grasped here and the good news is that we have a government with a reforming zeal and one which appears to recognise what is at stake.
If the various issues can be tackled in a joined-up approach then we have a chance to deliver a sustainable and fit for purpose housing and mortgage market not just for the next five years, but hopefully generations to come.
