While the economic climate remains unsettled both at home and abroad, investors and developers are reluctant to act.
Uncertainty is the enemy of investment. Here, deep cuts to welfare benefits, increases in defence spending while interest rates, inflation and borrowing remain high, means extra funding for private housebuilding, renting or other parts of the industry is unlikely.
Employer worries about imminent rises in national insurance and the minimum wage will weigh just as heavily on those who may have otherwise considered taking on or adding to existing finance too.
Given this background, the Chancellor’s options are limited and the Spring Statement is probably just as much about what she does as doesn’t do, as far as property is concerned.
FURTHER SUPPORT AND GROWTH
More than anything, we don’t want Rachel Reeves to compromise existing buyer and seller activity but do want her to further support growth where possible.
A steady rise in the number and pace of transactions is not only good for the property market but for the economy in view of the multiplier effect on job and social mobility.
In particular, first-time buyers are pivotal as they regularly trade up so release ‘second steppers’ as well as connect chains.
“Just as we’re saying cheerio to Help to Buy, a new version is unlikely anytime soon.”
Just as we’re saying cheerio to Help to Buy, a new version is unlikely anytime soon as it became to be regarded more as Help to Sell and a boost for housebuilders. Equity loans with salary caps complimented by more relaxed borrowing for genuine first-time buyers would certainly make a difference.
The shortage of affordable homes for sale and rent is a significant contributor to the housing crisis but cannot be addressed by building homes alone.
More efficient use of existing resources such as reducing record numbers of empty properties as well as better utilising unused and under-used land and buildings in anticipation of substantial population growth is vital.
PLANNING CONSENTS TAKING TOO LONG
It’s not just planning but affordable lending and the ability of local authorities to deliver suitable units in appropriate places which is deterring investment – despite the government’s ambitious ‘how, not if’ targets. In any event, planning consents are still taking too long, not least due to a shortage of Council resources, capacity and approved local plans.
Enforceable time limits for dealing with planning applications and more standardised ‘boundary-blind’ decision-making would improve certainty – especially for the crucial SME sector. We find most SMEs cannot afford to pause unlike larger companies and invariably blight neighbourhoods if their projects stay undeveloped for longer than necessary.
“Construction activity is also vital to keep prices and rents under control but takes political consensus and time.”
Construction activity is also vital to keep prices and rents under control but takes political consensus and time. However, builders will only build at the rate they can sell and won’t even try to obtain planning unless schemes are perceived as imminently profitable.
Local authorities and housing associations may take their place if sufficient resources still remain after meeting other responsibilities such as fixing cladding, damp, mould as well as other health and safety obligations.
RESILIENT DEMAND
On existing sales, demand has proved resilient – especially for houses – partly due to many prospective purchasers recently trying to take advantage of the stamp duty concession before its withdrawal at the end of March.
A consultation into fairer distribution of stamp duty to encourage greater activity at lower price points and even sellers paying would be very welcome. Relatively easy ways of accelerating conveyancing would be to try to reduce search times and impose an enforceable time limit on those contributing information to the process such as service charges, especially for leasehold properties.
“The ambition of most tenants is to pay their mortgage, not their landlord’s.”
Lettings should not be forgotten because the ambition of most tenants is to pay their mortgage, not their landlord’s. Ever-rising rents frustrate deposit saving and sales to say nothing of the impact on job mobility at a time when landlords are leaving the sector.
Reducing the time to legitimately evict disruptive tenants prior to the introduction of the Renters Rights Bill later this year would help to maintain the supply of accommodation but would be equally welcome by tenants just wanting a quieter life.
Better enforcement of other short-let accommodation would level the playing field with longer-term lettings and represent another way of reducing the landlord exodus into that sector in view of its lack of regulation.
It shouldn’t be forgotten either that many landlords are doing the job of local authorities unable or unwilling to provide affordable homes with up to 25%, or over 1 million, of private rented sector tenants paying housing benefit.
Overall, no silver bullets please Rachel, as small steps can still make a significant difference.
Jeremy Leaf is a north London estate agent and a former RICS Residential Chairman
