Key Consumer Duty developments and recent communications issued by both AMI and the FCA, with commentary on implications for mortgage intermediary firms…
By the time this is published we should have a new government with a mandate to govern for 5 years, unless voted down. This new team inherit a very different set of issues than their predecessors. It is easy to forget that 5 years ago we were still looking over the edge of the financial abyss. It was the strong approach taken to address the structural deficit that kept our status as a safe financial haven and retained our ability to fund our borrowing cheaply.
This new government is faced with the problems caused by success. Whilst a firm hand on spending and the delivery of sensible tax policies which encourage work will still be required, it is the issues created by a growing workforce, expanding population and ballooning group of over 70’s that presents the real challenges. We are the country with the highest birth rate in Europe, and this delivers pressures across all parts of the welfare system.
However it is housing that has leapt forward in the campaign period. All political parties have been committing to plans to build many more homes. There was a lot about the how many but not much on the how this will be achieved. All our house builders will need time to recruit enough bricklayers, plumbers and electricians as well as roofers to increase significantly their production. In addition, the supply industry is not resourced to meet any large uplift in demand. This is irrespective of the issues of planning consents and whether the building industry actually has the appetite to move forward at any real rate. What is undoubted is that local authorities no longer have the expertise or the funding to produce housing at the rates being proposed. This leaves Housing Associations from the current list of players. The plan to give their tenants the right to buy might be one of the most misguided election pledges. The money paid by the “owner” will rarely be enough to allow the asset to be replaced and will diminish the stock available to those who really need help. It has to be hoped that this is one plan that does not have a future.
The need is not for just more estates tacked on to existing towns or the regeneration of brownfield sites, but to be close to delivering the volumes that are being promised, we need 10 new towns the size of Milton Keynes, spread across the South of England. It is only with the delivery of real motorway and rail infrastructure and roads and schools planned in at the start, that you will then get the jobs to follow that will build real and viable communities. One of the real issues is that land prices remain too large a proportion of the cost of any new property. For any plan to work we are going to need central intervention to provide the land at prices less than current values, but sale prices protected to avoid these allowing excess profits.
However this will need some new players in the market to fund and manage the expansion we need. This has to be a way that financial institutions rebuild trust with the UK population. However it will also need structures like the Garden City Trusts and the Development Corporations that grew cities like Letchworth and Welwyn. Or it needs the same structures that have developed Milton Keynes. It will only be by the new Westminster regime thinking big and long that we will see the solutions the UK needs.
As an industry we need to be open to new concepts and solutions and use our expertise to ensure that tomorrow is better for more people.