Starmer's General Election victory focuses the minds of industry professionals
When it came, it was hardly a surprise, yet the scale of Labour’s huge General Election win still packed an extraordinary punch, as a collage of red dominated the UK’s political map – leaving the Conservatives feeling truly blue, and the mortgage industry questioning…. What now?
The worlds of politics and mortgages are inextricably linked, of course. So much of what our political leaders do (or don’t do), the promises they make and the promises they break, have a direct bearing on the industry and the customers it serves.
Never more was this apparent than in recent times and the impact of the mini-budget ushered in by the UK’s shortest-serving Prime Minister, Liz Truss, and Chancellor Kwasi Kwarteng, in 2022, and the spiraling costs of people’s mortgage payments which followed. Truss was roundly punished by the electorate and unceremoniously lost her seat in this election - never underestimate the might of disgruntled borrowers, you might deduce!
Perhaps Truss should have taken a leaf out of former Housing Secretary Michael Gove’s book and jumped before she was pushed. Gove somewhat wisely took an early bath and chose not to stand again after 14 long years of Tory rule. A controversial yet politically shrewd figure, he saw the writing was on the wall… and, when the four walls of the electorate became ever harder to afford (along with the other costs of living), something had to give. And so it did.
Now, the hard work begins for incoming Prime Minister Sir Kier Starmer.
“As the dust settles, focus must turn to how Sir Kier and Labour will govern and use their mandate,” reflected John Phillips (pictured left), CEO of broker firm Just Mortgages and Spicerhaart estate agents. “Critically for the housing sector and the mortgage market, we need to see how he plans to overcome the significant challenges both face – especially with the massive role they play in the wider economy.
“A major focus of his manifesto was increasing housing supply, which is undoubtedly a clear priority – especially when it comes to delivering the affordable housing stock that is desperately needed. Just as important though is providing measures that actually help buyers get onto the ladder, as well as answer the clear affordability pressures we are seeing across the market. We’d love to see greater support for the likes of shared ownership which are actually helping to provide a solution to many potential borrowers.”
How will a Labour government impact landlords?
As the country woke up on Friday morning, blinking into the daylight of a UK soon to be under Labour rule, Karl Wilkinson (pictured second from left), CEO of Access Financial Services, contemplated how landlords would be affected by a change of government.
“With the Labour win, some landlords will be reconsidering their options,” Wilkinson commented. “Labour said they will immediately ban Section 21 no-fault evictions, which could push portfolio landlords out of the buy-to-let market, resulting in rental accommodation becoming even more scarce and expensive. That said, Labour’s ambitious house-building plans is good news for landlords, especially if it increases the supply of social housing so low-income households don’t have to rely on the private rental sector.”
It was a concern, too, of Ben Beadle, chief executive of the National Residential Landlords Association, who declared: “We stand ready to work constructively with the new government to ensure changes are fair and workable for tenants and responsible landlords and are sustainable for the years to come. It is vital however that reform does not make worse an already chronic shortage of rental properties to meet demand.”
Nick Leeming (pictured centre), chairman of estate agents Jackson-Stops, noted the uncertainties that came with the swing of the political pendulum.
“Much is still unknown about how much of Labour’s manifesto they will be able to implement, and how quickly,” he reasoned. “Optimism for some about the future is supported by our recent research which found that nearly a third of respondents believe a Labour government will make home ownership more accessible.
“Labour has pledged to build 1.5 million new homes within five years which would be the biggest boost to affordable housing in a generation by building on the grey belt and creating new towns. Such an ambitious target will take significant time, resource and support to achieve. The property industry will be looking for further clarity but also the opportunity to engage with the government to bring Labour’s policies to fruition in a sustainable and effective way.”
In a less generous mood was Michelle Lawson (pictured second from right), mortgage adviser and director at Lawson Financial.
“Honesty and integrity have been lost in politics,” Lawson commented. “Keir Starmer has now got a momentous uphill struggle to meet his promises in the manifesto - 1.5 million houses don't build themselves and affordability won't be transformed overnight. The General Election result, if nothing else, is a huge lesson for politicians to listen to the public who vote for them.”
READ MORE: How can the government support the mortgage industry?
How will Labour’s plans for new towns benefit the UK?
Amanda Symes-Reeves (pictured right), product manager at prime residential mortgage lender MPowered Mortgages, said she was encouraged by Labour’s plans for building a new generation of new towns.
“If they can crack this, then this will have a positive impact by helping more people on the ladder," commented Symes-Reeves. "New towns, which are well planned with a full suite of amenities and services such as schools, hospitals, doctor surgeries and recreational areas will both provide new jobs and homes that will stimulate the economy and have a positive impact nationally. We would also like to see the ability of local authorities to share in the reward of housing building in their areas to allow them to invest in local infrastructure and also in the social housing sector.”
The chief executives of the mutual trade bodies Co-operatives UK, The Association of Financial Mutuals, the Building Societies Association and Association of British Credit Unions Limited (ABCUL), have meanwhile written to the Prime Minister offering the support of the sector to help deliver growth and sustainable benefits to wider society and unlock new capital raising options.
Referencing Labour’s 400-plus seats, Richard Harrison, head of mortgages at digital lender Atom bank, said the size of its majority would allow the new government to address some of the issues faced by the property market.
“There’s no question that we aren’t building enough homes to meet demand, so addressing the planning system will be crucial,” he said. “In addition, I’d like to see time given to whoever is appointed housing minister, given the way it has been a revolving door in recent years.”
And last but not least, Simon Webb, managing director of capital markets and finance at later life lender LiveMore, commented: “As Labour settles in, the new watch word will need to be affordability. Labour’s manifesto prioritised maintaining current stamp duty exemptions for first-time buyers but has made no mention of extending this exemption to other buyers. Leaving older buyers trapped in large houses they can’t downsize from and locking younger buyers out. Regardless of how the new government plans to address the housing crisis, it is crucial that they listen to the industry first for guidance.”
