General election speculation sparks industry debate
Prime Minister Rishi Sunak’s admission that he’s working on the assumption that he will hold a general election “in the second half of this year” has done little to quell speculation about the upcoming vote.
The election is already focusing the minds of mortgage and housing industry professionals about what they want from their government, and, potentially, who’s likely to deliver it.
With memories still relatively fresh of Liz Truss’s short, ill-fated tenure in 10 Downing Street, and the resulting chaos caused by her Chancellor’s far-from-mini budget, few could deny how our choice of PM can directly affect the industry’s fortunes. Furthermore, there’s the impact that polling day could potentially have on the economy and, in turn, the mortgage sector.
The election may still be many months away but Mortgage Introducer has gone to the polls early… by canvassing the opinions of some prominent figures in the sector.
“The upcoming general election will create uncertainty as elections always do, and this could negatively impact the markets, with a knock-on effect on swap rates,” considered Rob Barnard (pictured left), intermediary relationship director at specialist lender Pepper Money.
“As we approach a general election it will be interesting to see what vote winning initiatives we see from all sides. Will there be a return of Help to Buy, for example, maybe in a slightly different guise? I’d really like to see stability from the government in respect of the Housing Minister position – we have had 16 since 2010. This high turnover doesn’t give time for any of them to make any sort of impact on the position.”
Biggest wish
Michelle Lawson (pictured centre), mortgage adviser and director at Lawson Financial, believes those potentially vying for power have a choice of whether or not to make a difference.
“My biggest wish is for housing to be a major governmental department,” Lawson commented. “Along with health and education, housing is a fundamental basic and should be treated much more seriously than it is.
“It is a shameful state of affairs to have had 16 housing ministerial changes since the Conservatives took power in 2010. The average time spent in the role of the previous 15 ministers was just under 10 months, with just five lasting one year or more. This is not long enough to get the seat warm and make a difference.”
She continued: “The private rental sector (PRS) is on its knees thanks to the countless introduction of regulatory red tape, burdening license fees, the abolishment of Section 24 increasing the landlord tax burden, and the increased interest rates and stress testing all adding to the disastrous state of affairs with the housing crisis, rising rents and a lack of homes.”
For Samuel Whittlesea (pictured right), mortgage adviser and financial protection specialist at Whittlesea Mortgages, it is important for the government to encourage the creation of more affordable homes.
“Efforts need to be stepped up to enable the conversion of suitable unused properties into homes,” Whittlesea said. “For example, an empty town centre department store could, in theory, be turned into many affordable flats.”
Serena Smith, mortgage and protection specialist at Mortgages with Serena, meanwhile, believes that politicians need to understand why people want – or don’t want - to own property. “It’s a very British thing and it gets harder all the time to achieve ‘the British dream’,” she said.
First homes
The government should do more to help first-time buyers, believes Nicola McKenzie, director of national brokerage DM Mortgages.
“The Help to Buy scheme worked well,” McKenzie enthused. “Many of our clients used it to buy a home when they couldn’t have otherwise. While there are some things to help with deposits, nothing compares to the impact of Help to Buy.
“It seems the government has forgotten about this part of the market. Bringing back a similar scheme would be great. It could make it easier for first-time buyers to afford homes and bring more life to the housing market.”
She added: “I believe the buy-to-let landlord market is under too much pressure, which is ultimately driving up rental prices. This increase also makes it harder for first-time buyers to save for a deposit and get on to the property ladder.
“The pending abolition of Section 21, along with increases to rates and other factors, has made many buy-to-let investors reassess their positions, but there still needs to be some form of incentive to ensure that rental prices remain reasonable for tenants while still supporting the financial viability of landlords.”
What, then, does Matthew Cumber, managing director of Countrywide Surveying Services, think the government can do to improve mortgage business?
“The first step would be to improve planning laws and have a housing minister in situ for longer than a few months at a time, which will help generate a more cohesive and actionable affordable housing and rental strategy for the entire county,” suggested Cumber.
“It’s also crucial to realise that the PRS is not the enemy, far from it, and we need to see the introduction of more favourable tax policies to encourage growth in this sector rather than hinder it.”
Decision makers
Richard Harrison, head of mortgages at Atom, the UK’s first app-based bank, believes that, on the whole, the market works well, with lenders doing a good job of supporting customers. But he thinks there is more that the Westminster decision makers could do.
“While it is a real positive that the mortgage guarantee scheme has been extended, the truth is that some lenders would already go the extra mile in supporting higher loan-to-value borrowers,” Harrison declared.
“At Atom bank, for example, we do this without making use of the government’s insurance. However, it’s on house building where government support can really make a difference. We need to achieve the target of 300,000 new homes a year in order to meet the existing demand from would-be homebuyers.
“Crucially, that needs to be done in a way that satisfies the various stakeholders involved, such as the buyers and developers, as well as meeting broader environmental considerations.”
Meanwhile, Daniel Yeo, managing director of brokerage Specialist Finance Centre, has a very clear wish list of what he wants from his government. He hopes it will do its best to influence a reduction in the base rate; implement measures to assist many of those who find themselves ‘mortgage prisoners’; provide mortgage payment subsidies for the most vulnerable, and allow mortgage payments to be deducted at source.
Watch this space…
