Truss was confirmed in the role earlier today, beating Rishi Sunak after a long leadership contest.
The contest arose after incumbent Boris Johnson stood down following a wave of resignations linked to his knowledge of allegations against former deputy chief while Chris Pincher.
Cost of living comes first
Brokers said that one of the biggest priorities for the new prime minister was managing the cost of living crisis.
Rhys Schofield, managing director at Peak Money, said: “The new prime minister only needs to have three words in their inbox: cost of living. It’s not complicated.
“This is the biggest issue facing the whole country at the moment. It doesn’t matter what your policies are if half the country is in fuel poverty and businesses are shutting left right and centre because they can’t pay to keep the lights on.”
Imran Hussain, director at Harmony Financial Services, added: “The main focus for the prime minister right now should be the cost of living crisis, or she will be the prime minister who was at the wheel when anarchy broke onto our streets.”
A helping hand up the ladder
In terms of the property market, Mike Staton, director at Staton Mortgages, said: “I think the biggest challenge facing the market is getting people onto the property ladder, with the increase in cost of living widening the gap between income and expenditure.
“First-time buyers, especially, are finding it hard to get their deposit sorted or meet the strict affordability criteria at high loan to values (LTV). With the removal of the Help to Buy equity loan scheme, something needs to be done in order to give people a helping hand to get on the property ladder.”
At the end of the August, Ofgem said that it would increase its pricing cap from £1,971 to a new record high of £3,549.
Brokers have warned that large increases in energy bills, and other cost of living pressure, were already impacting lenders’ approach to affordability and denting efforts of first-time buyers to build a sufficient deposit.
Media reports have suggested that Truss will announce her plans to help people with bills but declined to share specific details. However, some have suggested that one of the policies could be a price freeze for some energy bills.
House building needs to be improved
Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, said that the “single biggest thing” that the new prime minister could do is to build more homes.
“At the moment, we have the bulk of housing being built by a handful of national house builders, who have absolutely no incentive or interest in seeing the volume of houses increase to the level needed, as that would bring the average cost of houses down over the long term.
“Great for us, terrible for the profits of those builders who currently have a stranglehold on UK housing,” he added.
A spokesperson for Leeds Building Society, said that there was “no simple fix” for the housing crisis but it challenged Liz Truss to meet its manifesto commitment to build 300,000 homes a year.
“With the economy on the cusp of recession, we should be clear that building homes is good for growth. By delivering on the manifesto pledge, the new prime minister would be generating over £14 billion of economic activity and creating 260,000 additional jobs,” the spokesperson added.
They added that solving the housing crisis could only be addressed via “strong political leadership, a willingness to challenge popular misgivings and following the facts”.
The spokesperson said that this required a long-term strategy to give confidence to the industry, rather than “stop-start reform and the revolving door of government ministers tasked with the brief”.
The mutual spokesperson added that Leeds Building Society looked forward to working with the government and would be ready to support a long-term view of housing delivery.
Energy efficiency should come into ‘sharp focus’
Taylor-Barr also noted that making home owners greener should be a priority, so paying to insulate homes with grants, making solar panels easier and cheaper to install along with further incentives.
He suggested doing this by linking council tax banding to Energy Performance Certificate (EPC) ratings, similar to those of vehicle emissions and road tax.
Nathan Emerson, Propertymark’s chief executive, said that the rising cost of household gas and electricity bills brought “energy efficiency of our existing housing stock into sharp focus”.
He said that EPC targets were looming, there was “no long-term plan that sets out how they will be achieved”.
“Propertymark is a strong advocate of making homes more energy efficient as the best solution to bringing down bills. However, it is unlikely that significant progress can be made until ministers better understand the current housing stock and then apply realistic targets based on properties’ individual characteristics with sustained funding for homeowners,” Emerson explained
Government departments need more joined-up thinking
James Tucker, founder and CEO of Twenty7Tec, urged Truss to treat housing and mortgage sectors as more interconnected, and that the Department for Levelling Up and Treasury needed more “more joined-up thinking on how they work together”.
He added: “In my view, the government needs a fully functioning mortgage market in order to continue to deliver a healthy and vibrant housing market which contributes to the nation’s greater wealth.
“We’d love to have clear commitments in relation to how to support first-time buyers, for example. Without first-time buyers being able to access the market, then the rest of the chain is possibly overly reliant on buy-to-let landlords at the lower echelons.”
Graham Cox, director at SelfEmployedMortgageHub.com, said that the prime minster needed to “recognise that the housing market is completely broken”.
He said rents and house prices were “sky-high and unaffordable” for most, pointing to London property prices being 11 times more than average earnings, compared to the historical average of four.
“The first thing the prime minister should do is either include housing costs, mortgages and rent, in the two per cent inflation rate target, or set economic policy to target zero house price inflation until wages catch up and we get back to four times earnings. If it takes 20 years, so be it. Long-time homeowners can have no complaints, they’ve had it good for decades,” Cox added.
He also noted that stopping Right to Buy and building more social housing could be helpful to make property affordable again.
