The Intermediary Mortgage Lending Association has published its 2022 Mortgage Market Manifesto, pledging to put renewed pressure on the government to fix the ongoing imbalance of housing supply and demand, among other things.
The trade body’s executive director, Kate Davies, said today (January 17) the UK housing market needed “a long-term vision” in which the government is better aligned with the wider industry.
“It is paramount that this vision is underpinned by a strategy to address the pressing issues we are facing,” she said.
“For example, we don’t just need more homes – we need more homes of the right design, which are energy efficient and serviced by appropriate infrastructure such as roads, schools and hospitals.”
IMLA said the government’s First Homes scheme, announced back in May 2021 to tackle the housing supply shortage, was “still relatively small-scale” with pilot projects about to go live.
“Its success will ultimately depend on the appetite of developers to get involved and self-fund the initiative,” the trade body said.
“We have expressed some concerns about how borrowers using the scheme to buy their first property would be able to trade up in the future, given the requirement to sell at a 30 per cent discount.”
Helping non-standard customers
In the interest of more people owning a house across the UK, IMLA said it “welcome[d]” the news last month that the Bank of England was planning to consult on removing the 3 per cent stress test, which it argued had “prevented numerous prospective borrowers, including many first-time buyers, from stepping onto or up the housing ladder”.
The Financial Conduct Authority already requires mortgage lenders to assume interest rates will rise by a minimum of 1 per cent over the first five years of a new mortgage in their affordability tests.
The IMLA said this was enough of a test on affordability, despite much industry debate on the topic.
We believe that many consumers would be able to find a mortgage to suit them if they were to approach an expert mortgage intermediary to advise them on what is available in the market.IMLAIn tandem, the trade body said the “overriding message” held by the sector was ‘you may not be eligible for the lowest rates advertised, but that does not mean that you will not be able to get a mortgage’, based on surveys conducted with consumers and members last year.
“We will continue to emphasise this message and work with our intermediary colleagues to reach as many aspiring homeowners as possible,” it said.
“We believe that many consumers would be able to find a mortgage to suit them if they were to approach an expert mortgage intermediary to advise them on what is available in the market.”
‘Unwelcome measures’ risk BTL exodus
Following the increased numbers of landlords buying buy-to-let property during the stamp duty holiday last year, the IMLA is also concerned for the future of landlords.
Providing homes for 20 per cent of UK households, the trade body said the sector had “remained vibrant despite a ‘layering’ of policy changes introduced by previous administrations”.
It added: “But there could be more unwelcome measures in store, such as proposals to increase capital gains tax rates to mirror income tax.”
The IMLA said it has “consistently” argued the government should resist making additional changes which risk deterring landlords from further investing in the buy-to-let market, warning this could lead to “significant numbers exiting the sector”.
“This would only push rents up – making the tenure more expensive for all tenants, and leaving those who are trying to save for deposits with less disposable income and thus less able to do so,” it said.
Is govt greening strategy 'fit for purpose'?
For buy-to-let landlords, the pressure of making their houses more energy efficient is a growing concern in light of the government’s target for them to achieve an energy performance certificate (EPC) rating of C or above by 2025.
IMLA said proposals for obliging property owners to carry out improvement works “must be carefully thought-through and subject to strict quality controls” to ensure both materials and cash are not wasted.
It added that EPCs, “on which so much reliance is currently being placed”, need to be “closely examined and assessed to ensure they are fit for purpose.
“There is a danger that piecemeal policy will lead to confusion and a variety of unintended consequences,” the trade body said.
“The task is immense but the government must lead in coordinating a strategy for planning, incentivising and funding work to improve the energy efficiency of Britain’s housing stock.”
Cladding legislation needs clarity
Following secretary of state Michael Gove’s announcement last week on cladding, IMLA said funding cladding remediation work “remains a critical issue”.
Gove wrote to developers this month requesting they stump up £4bn by early March for remediation work on cladding on 11-18 metre buildings.
But some in the industry are worried other non-cladding issues have been “avoided” by the government, such as wooden balconies, compartmentation, and insulation.
With costs “anywhere between £15bn and £50bn”, IMLA suggested the government’s committed £5bn to the issue and the £4bn it plans to collect from property developers won’t stretch far enough.
“New statutory protections for leaseholders, is welcome – but may still leave leaseholders facing large bills for remediation work to address other defects,” said IMLA.
“Legislation must clearly identify where responsibility lies for defective construction and create a fair and proportionate system for funding ongoing maintenance of properties so that leaseholders are better protected in future.”
ruby.hinchliffe@ft.com
