In the weeks running up to the general election, activity in the UK housing market remained relatively subdued. The Bank of England reported the number of mortgage approvals was down 11 per cent in the year to the end of February 2015. Gross lending fell 8 per cent from £17.6bn to £16.2bn over the same period.
Referring to its monthly Residential Market Survey, The Royal Institute of Chartered Surveyors (Rics) described the number of house sales and buyer enquiries as having flatlined. It said that anecdotal evidence suggested that election uncertainty was causing vendors to hold off putting their property on the market.
Ironically, while the combination of subdued demand and lack of new properties on the market had kept sales levels muted, prices were beginning to rise again because of the shortage of properties coming to the market.
Manifestos
The CML had issued its own manifesto in the form of a document and a short film. In these it identified some of the major issues in the housing market that it would like the Government to address. The need to increase the amount of housing stock was top priority. It pointed out that the supply of new homes through a housebuilding programme needs to be ambitious, consistently delivering between 200,000 and 250,000 new homes each year for the next 10 to 15 years.
It covered other issues too such as borrowing into retirement and issues around the private rented sector – for example, the effect of housing benefit changes on rental arrears. In short, it called for a coherent housing strategy to address the issues it highlighted.
Rics, meanwhile, commented on the political parties’ manifesto pledges on the sector. The Conservatives promised 200,000 new homes for first-time buyers under 40, and 275,000 additional affordable homes by 2020.
They also pledged to extend Right to Buy to 1.3m housing association tenants and promised £1bn of brownfield regeneration over four years. In response, Rics pointed out that the Right to Buy policy would do little to solve the shortage in overall housing supply. It described the policies as falling short of a comprehensive housing strategy.
Labour promised 200,000 new homes by 2020 and among other things to abolish stamp duty for first-time buyers, ban letting agent fees and make it standard to have tenancies of three years as a minimum. Rics described these policies as “short on financial details” and failing to address the housing shortage.
The Liberal Democrats promised 300,000 homes by 2020, a housing investment bank, two new schemes called ‘Help to Rent’ and ‘Rent to Own’ and a Green Buildings Act to set new energy efficiency targets. Rics said that the rent schemes had the potential to make a difference, but that more policies on the private rented sector were needed.
Not to be outdone, the Green Party promised 500,000 social rented homes by 2020 amongst other things. Rics described its programme as “ambitious”, but notably silent on “policies to stimulate private provision”.
UKIP promised to build one million homes on brownfield sites by 2020, to remove stamp duty from the first £250,000 of new homes built on brownfield, statutory powers to force local authorities to bring empty homes back into use and social housing to be available for people whose parents were born locally. Responding, Rics described its policies as “the first real programme of this campaign that seeks to solve Britain’s long-term supply-side crisis”.
Builders’ survey
Of course it will take more than a few well intentioned promises to solve the housing crisis. A survey of house builders conducted by Knight Frank put a dampener on these pledges to build more housing. The UK is expected to grow by about 230,000 households a year, but only 9 per cent of the builders surveyed thought that a target of building 200,000 new homes a year was achievable as shown in the Chart.
Also, while many of the political parties pointed to the use of brownfield land to help ease the housing shortage, 47 per cent of respondents to the survey thought that the rules around the development of greenbelt land should be relaxed.
Although 59 per cent expected the number of housing completions to rise over the next 12 months, around 50 per cent expected no change in the delivery of affordable houses.
Now the election is over, presumably normal market activity – whatever that looks like now – will resume. The Conservative government can get on with business as usual – juggling the resources available to close the gap between the promises and aspirations voiced during the campaign and what is likely to be delivered.
