June 10, 2017
A hung parliament, 15 Housing Ministers and the figures behind Help to Buy
Well, since our last housing market update, quite a lot has happened in the country. Not least the shock result in the general election, where a late Labour surge proved most of the pollsters wrong and led to the Conservatives being the largest party but losing the slim majority they had secured in 2015. This, of course, resulted in a hung parliament.
Since then, Theresa May’s position has come under severe scrutiny and she has been forced to do a deal with the DUP to prop up her minority government. After a year of uncertainty following the EU referendum last June, May’s gamble for a bigger mandate didn’t pay off and uncertainty looks set to reign for a while yet, particularly with Brexit negotiations now in full swing.
But what does all this mean for the London property market? First things first, the property market has once again proved its ability to withstand the outside pressures of economic and political instability. What’s more, the shorter election campaign and the fact we’ve all become rather used to living with elections and referendums taking place in the background in the last three years meant that people were much less put off taking decisive action on buying and selling homes this time around.
Despite Brexit and the general election, many people – particularly families with young children – have been prepared to take a business as usual approach, with their decisions unaffected by what’s currently going on in the political sphere.
That said, the general election result clearly caused a bit of an earthquake – and, in terms of housing and the government, led to yet another change in personnel. The Grenfell Tower tragedy has also opened up a number of difficult questions about tower blocks, social housing and the private rented sector, regarding how to keep homeowners and tenants safe, what fire and health and safety regulations need to be put in place and how to prevent a disaster on that scale ever happening again.
A 15th Housing Minister in 20 years
One direct consequence of the recent snap general election was yet another change in Housing Minister. Gavin Barwell, Housing Minister in the lead-up to the election, lost his marginal Croydon Central seat to Labour’s Sarah Jones. He’s since been appointed as Theresa May’s new chief of staff, with the housing brief being passed onto Reading West MP Alok Sharma.
Astonishingly, fifteen different people have taken on the position of Housing Minister since 1997 – nine under the Labour government, and six more since the Conservatives won back power in 2010. None of the ministers in the role, ranging from Yvette Cooper, Margaret Beckett and John Healey for Labour to Grant Shapps, Brandon Lewis and Gavin Barwell for the Tories, have lasted for more than two years.
The role of Housing Minister, which doesn’t hold a position on the Cabinet, has now been passed to someone with no experience in housing. Sharma, who has been the MP for Reading West since 2010, has a background in banking and accountancy and served as the Conservative Party vice chairman from 2012-2015, as well as being a member of various select committees.
He has quite the in-tray to contend with – as well as dealing with the fallout and anger from the Grenfell Tower disaster, he will also be expected to implement the proposals set out in February’s Housing White Paper, which included plans to speed up the planning process, introduce a ban on letting agents’ fees to tenants, free up more public land for house building and increase the role of small and medium-sized house builders.
He will also be expected to deliver the government’s pledge to build one million new homes by 2020, root out rogue landlords and improve and enhance the increasingly vital private rented sector.
Second steppers turning to Bank of Mum and Dad
In non-election news, research by Lloyds Bank has suggested that the Bank of Mum and Dad is helping out second steppers as well as first-time buyers when it comes to purchasing homes.
Nearly a third of second steppers – existing homeowners who are looking to move up the property ladder with their second house purchase – believe they will still rely on financial support from parents and loved ones when leaving their starter home behind, with 17% turning to the Bank of Mum and Dad, 9% turning to grandparents and 6% seeking help from friends.
More than 285,000 use Help to Buy to purchase homes
According to government figures released in June, over 285,000 people, including 240,000 first-time buyers, have utilised one or more of the Help to Buy schemes.
Across the schemes the average house price is £193,826, below the value of the typical UK home, while over 90% of completions aided by more than one of the schemes have taken place outside of London, batting away criticism that Help to Buy has only helped those in the capital.
Furthermore, the government insists the Help to Buy ISA has helped more than 960,000 people save towards their own home.
In the capital, the London Help to Buy scheme provides an equity loan of up to 40% for buyers with a 5% deposit. Between February 2016 and March 2017, it assisted 3,249 buyers in the purchase of homes.
While the scheme has a number of strong critics, the figures suggest that many first-time buyers have benefitted from Help to Buy, enabling them to purchase a home that otherwise might have been unaffordable.
Some might argue, given the length of time Help to Buy has been going for (it was first introduced in April 2013), that more buyers might have been assisted. Equally, there are some who say there is too much confusion surrounding the different schemes and what their purpose is.
But supporters will say it has helped people onto the property ladder who wouldn’t otherwise have been able to raise a deposit. And that the figures above prove the success of the scheme.
That’s that for June’s round-up. We’ll see you again in July for a further update on London’s property market.
If you need any advice on selling or letting a home in London, Atkinson McLeod would be delighted to help. You can get in touch with your local Atkinson McLeod branch here.
To find out how much your property could be worth, why not request a free and instant online valuation?