Key Consumer Duty developments and recent communications issued by both AMI and the FCA, with commentary on implications for mortgage intermediary firms…
The latest Tory party conference again put housing back near the top of the political agenda. Initiatives to help buyers, promote building and encourage activity have been part of the landscape for some time but it seems that this time there is a bigger and wider plan. The BBC has also recently picked up on how broken the UK housing market is with high profile set piece news and editorial programming on both television and radio.
The failure to build enough in all tenures and the lack of investment in infrastructure is being pushed as core messaging. Outside of Brexit this appears to be the flagship element of current policy. Indeed it is clear that within the Civil Service, housing policy has achieved a new enhanced status with more staff and higher profile ministerial support. It is our continued failure over the last few decades to build the now commonly agreed 250,000 new houses a year that is in the spotlight. We are still at least 20% short on current delivery and have an accumulated shortfall estimated by some which might be as large as 1 million homes.
It has to be noted that it has taken 50 years to develop the new town of Milton Keynes to have 100,000 homes. To begin to address our housing crisis needs savage inner city regeneration by mass demolition, or 4 new privately developed “Milton Keynes”. This is a scale of development that requires not just housing planning, but commitment to a deeper infrastructure. There needs to be jobs, proximity of rail and quality road transport and finally, perhaps surprisingly, access to good shops. This will give employers confidence to site there and grow their businesses with certainty about housing and quality of life. Houses need to be close to jobs and transport links to create a virtuous circle.
The real issues that face us today were well set out by Kate Faulkner, a highly rated commentator on UK property matters, on BBC Breakfast in the last couple of weeks. She identified that whilst the government has indicated support for local councils to start building again there is the lack of a real plan. We have government aspiration, support by funding, but it is then left to local authorities to develop their own local plans and ensure delivery. Put simply we have a high level approach from central government and a different set of priorities set out by Parish Councils and Local Authorities within their Local Development Frameworks. Until we have a method of connecting these it is unlikely that we will see success. There is a significant disconnect between the plans and crucially no resources in local authorities who can remember mass build programmes or how to find and employ the people to build.
However for any who doubt that this may lead to a more fundamental change should look at the world of Pensions. For over a decade the industry were encouraged to change direction or risk losing their preserved status. So then compulsion and taking benefits freedoms arrived which emasculated many of the traditional suppliers, as government have taken many of the industries benefits away. Private builders have been big winners out of the recent interventions on the housing market, but they have not delivered the volumes demanded and have had quiet warnings. Council building is the answer, so I would not underestimate the commitment of central government to deliver this and then reduce reliance on the private sector.
The final part of the housing conundrum is what to do with the elderly who are blocking the housing chain as they live longer. Last time sellers have not been coming to market as increased longevity and a push by the care services to maintain people in their own home has reduced volumes. Many elderly do not like the retirement home options available to them. The rise in Equity Release and changes to interest only polices will further reduce the elderly down-sizing and the number of homes becoming available.
These are longer term issues as with extensions to Help to Buy announced, plans to restore Council House Building and the Term Funding Scheme still open until February, there is much to underpin activity with more to come. We will not see results of these changes in thinking in the next five years, but the writing is on the wall.