So, while our political heads might well have been turned by all things Brexit or President Trump’s visit to the UK, the seeds have perhaps begun to be sown which might deliver a further revolution to our housing and mortgage market.
Bob Hunt (pictured) is chief executive of Paradigm Mortgage Services
It’s fair to say that recently our country’s political focus has not seemed to be centred particularly on the housing market, so it was somewhat odd to see political ‘announcements’ about and around our market on two consecutive days earlier this month.
Much like that old adage about waiting all day for a bus and then three coming along at once, our market has seemingly waited all year for a political message to be delivered and then two come along in short succession.
First up was James Brokenshire, the Secretary of State for the Housing, Communities and Local Government (HCLG) ministry who threw a veritable hand grenade into the pension market by suggesting younger, non-home-owning individuals should be able to access their pensions early in order to put these funds towards a deposit/first purchase.
While this would undoubtedly help a certain demographic, it did seem a rather odd approach to take when the government he has been part of has set great store on trying to ensure people save enough for their retirement needs. Being able to take a large lump sum out of that pension – you might think – would appear to be a sharp move away from the previous direction of travel, especially when you consider all the work that has gone into auto-enrolment, the Pensions Advisory Service, and the like.
Perhaps understandably, the pensions industry voiced plenty of caution around this approach, although we might – in our industry – all believe there is an argument to be made around allowing potential first-timers to get on the ladder by utilising the money they have saved, regardless of whether it was in a pension or not.
Having said that, the government I suspect will try to avoid such a move and perhaps continue to send would-be purchasers down the Lifetime/Help-to-Buy ISA route, rather than allowing them to take chunks out of a pension which is likely to be needed a lot by the time they get to pension age. Let’s be fair here, State provision into retirement is getting less and less and the responsibility is increasingly on the individual to make sure they have plenty in provision for it.
Following on from this, we had a report commissioned by the Labour Party entitled ‘Land for the Many’, which set out a number of potential policies a future Labour government might wish to implement should it secure power.
The headlines have been grabbed by calls for a progressive property tax to replace council tax and getting rid of stamp duty for those who purchase and will live in the property themselves, but looking at the other proposals, there’s no doubting that the buy-to-let sector and landlords in particular would be hit hard by many of these policies, should they be introduced.
The property tax would be paid by the owner not the tenant, second homes would be taxed at higher rates along with capital gains, plus there could be caps on annual rent increases as well as making buy-to-let mortgages ‘more firmly regulated and restricted’. Although you might wonder how much further there is to go in terms of regulation the sector?
There’s no doubt that this would be a set of policies that is likely to see even more buy-to-let landlords leaving the sector, which leaves you wondering where the housing stock is going to come from, for those who still can’t or don’t wish to buy, but still need a place to live. These are policies in favour of ‘Generation Rent’ and you might agree that there is some merit in keeping house prices affordable, whilst ensuring that land banking activities are stopped, and that land which is available can be utilised to build more properties. Who could disagree with that?
However, some of this focus seems to disregard the importance of the private rental sector in this country and the level of overall stock it supplies in terms of keeping people housed. Whether the Labour Party likes it or not, private landlords are required and they have to be able to make a profit if they are to keep working in this sector, especially if capital growth is to be managed downwards (or flat) by the government.
Plus of course any increase in tax and fee levels – as we have seen all too well recently – must be factored in. Curbs to rent levels would mean that tenants would not take the hit, and as a result, I suspect we would see great swathes of private landlords having to re-evaluate their position in the market. Indeed, they are doing this already, and the very big question of whether any of this makes more property available to first-time buyers, remains unanswered. I suspect not.
So, while our political heads might well have been turned by all things Brexit or President Trump’s visit to the UK, the seeds have perhaps begun to be sown which might deliver a further revolution to our housing and mortgage market. Only time will tell, if that revolution reaches as far as Number 10 Downing Street.
