July 28, 2016
How will Theresa May tackle the housing shortage?
In Theresa May’s speech outlining the main aims of the government, she cited the importance of housing and promised to do more to increase the number of new homes coming to market.
“Unless we deal with the housing deficit, we will see house prices keep on rising. Young people will find it even harder to afford their own home,” she said.
“The divide between those who inherit wealth and those who don’t will become more pronounced. And more of the country’s money will go into expensive housing instead of more productive investments that generate economic growth.”
So the new Prime Minister is keen to increase housing supply, but how will she do this?
New housing and Right to Rent
Well, when it became clear that there would be a new cabinet, the previous housing minister, Brandon Lewis, reiterated that the government would be sticking to its two key housing policies – building 200,000 Starter Homes by 2020 and extending the Right To Buy to 1.3m housing association tenants.
Lewis’ successor is Gavin Barwell, MP for Croydon Central, who has said he looks forward to working with councils, housing associations, developers and investors to make sure ‘we build the homes people need and deserve’.
In his first official address as housing minister, Barwell said: “Too many people are having to live in overcrowded or even unsafe conditions. Too many people are having to pay too much of their monthly earnings on their housing costs.”
Barwell’s comments echo those made by Theresa May above, with both politicians keen to talk up the idea of narrowing the gap between supply and demand.
However, the fact that the housing minister still doesn’t have a position in the Cabinet does make one question just how seriously this most critical of issues is being taken.
It will be interesting to see if May, who voted against building 100,000 affordable homes in 2013, will do more to address the UK’s shortage of homes.
In other news, the Residential Landlords Association (RLA) has called on the new chancellor Philip Hammond to take a fresh approach to the government’s relationship with landlords and tenants.
Many were critical of George Osborne, Hammond’s predecessor, and the controversial buy-to-let policies he introduced from summer 2015 onwards.
These included the additional 3% stamp duty surcharge on second homes, changes to the Wear and Tear Allowance and planned cuts to mortgage interest tax relief.
The RLA now wants the new chancellor to think about scrapping or changing these policies, claiming that they are forcing some landlords to sell up at a time when demand for private rental properties is at an all-time high.
London Property market resilient
Meanwhile, it was widely expected that the Bank of England would lower interest rates this month, but the body’s monetary policy committee voted to keep the base rate at 0.5%.
Interest rates have been held at historic lows since 2009 – and were even expected to increase if Britain remained in the EU – but the vote to leave led many to speculate that the rate would be cut to 0.25% to boost the economy.
So far, it seems the property market has remained largely unaffected in the post-Brexit landscape – especially in London – which has once again proved resilient.
Rightmove’s latest House Price Index has confirmed as much, with the housing market remaining steady post-Brexit.
While the price of property coming to market did fall by 0.9% in July, this was as much to do with the traditional pre-summer holiday season slowdown as it was to do with the outcome of the referendum.
Buyer demand has remained consistent, while in the two weeks post-referendum the number of sellers who brought their property to market increased by 6%.
For further advice on the London property market, you can get in touch with Atkinson McLeod here.
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