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Can the major political parties deliver on housing?

“Fine words” on housebuilding have yet to win over a sceptical industry ahead of the general election, with calls for more details ahead of the publication of campaign manifestos after Easter.

Housing has been identified as one of this year’s most critical topics, with Chancellor George Osborne using a prime slot in the final Budget of this parliament to introduce a new Help to Buy Isa in a bid to support buyers.

The Tories have also promised to build 200,000 homes specifically for first-time buyers over the course of the next parliament while Labour has pledged to raise overall levels of construction to the same figure on an annual basis by 2020, with 125,000 new homes built using a £5bn housebuilding pot from Help to Buy Isas.

The party will also offer priority to locals looking to purchase their first home in new housing areas.

The Liberal Democrats have promised to increase housebuilding to 300,000 a year by 2020 while the Greens have maintained their pledge to build 500,000 “social rental” homes.

However, figures from the Department for Communities and Local Government indicate total numbers of households will reach 27.5 million by 2037, up more than 5 million from present levels.

The DCLG says 137,020 homes were started in 2014, of which 82 per cent were launched by the private sector, with just 25,090 coming from public housing initiatives.

Indeed, since 2000, DCLG figures show only once has housebuilding even approached the levels promised by some politicians on the campaign trail, when a total of 187,000 homes were started in 2007.

So while promises of new homes are regarded as a positive, scepticism remains.

Association of Mortgage Intermediaries chief executive Robert Sinclair says: “We are hearing lots of commitment to do better but not much on the how.”

Sinclair argues property growth has become reliant on speculative housebuilders.

“Local authorities have sold off their housing stocks and not been forced to build, so now they have not got the people who know how to commission and get houses built for them.

“Even the authorities committed to replacing housing under the right to buy schemes are struggling to do that because they just don’t have the people for it.”

Hometrack research and insight director Richard Donnell says variations in local demand will also mean any plans for substantial increases in housebuilding will require local steering.

He says: “The numbers are do-able but you would need to see local government getting a lot more active.

“More housing would be a welcome thing but we also need changes in local government and funding and that will be linked to devolution post-election.

“I don’t think we will get there if we rely on the private house-building industry, which is waiting on a broader based recovery in the market.”

Labour’s plans include the introduction of city and country New Homes Corporations, which the party says “will have the power to build houses at scale by bringing together land, speeding up the planning process and contracting builders to get homes built where local people want them”. However, Donnell disputes the utility of the new systems proposed by Labour.

“I know a few local authorities that are trying to get new homes built. The question is are these things a new layer that might muddy the waters or do they have new and specific powers which mean they can get on and achieve more?”

British Property Federation chief executive Melanie Leech says: “Although it is attractive for politicians to try and make homeownership easier for those not yet on the housing ladder, the crucial element to solving the housing crisis is to increase supply.

“This means creating the right tax and regulatory environment for investment, particularly to encourage new sources of capital such as from institutions such as pension funds, which have an estimated £10bn to invest in build to rent schemes.”

Building Societies Association mortgage policy officer Robert Thickett is similarly dubious. “We are positive about the rhetoric but it’s how they turn those fine words into action that is going to matter because there doesn’t really seem to be much detail.”

Thickett says the trade body is keen to see parties commit to pulling together divergent threads of housing policy from DCLG, the Treasury and the Department for Business Innovation and Skills with the establishment of a “Cabinet-level” post of housing minister as well as demanding a 15-year plan for housing.

“We want a real commitment from whatever party gets into power to put measures in place and deliver the levels of protection that we really need.”

In brief: The key general election housing commitments

Conservatives

200,000 homes built for first-time buyers aged under 40, at 20 per cent discount

New Help to Buy Isa’s for first-time buyers to help them get a deposit for a house

Keep mortgage rates low so families are more financially secure

Extend the Help to Buy equity loan scheme to 2020

Labour

Get 200,000 homes a year built by 2020

Give priority to local first-time buyers in new housing areas

Prioritise capital investment in housing to build more affordable homes

SNP

Wants an end to “bedroom tax” policy

Pledge to build 30,000 new homes in the lifetime of this Holyrood parliament

Stands by affordable homes policy and the abolition of the right-to-buy social housing which becomes law in 2016

Ukip

Protect greenbelt by making it easier to build on previously developed land

Establish a brownfield agency to provide grants and loans

Referendums on major planning decisions

Lib Dems

Increase housebuilding to 300,000 a year

Set in motion at least 10 new Garden Cities

30,000 Rent to Own homes a year by 2020

Ban landlords from letting out poorly insulated homes

Greens 

Build 500,000 social rental homes by 2020

Bring empty homes back into use

Abolish the right to buy council homes

Plaid Cymru 

Support energy efficient housing improvements to reduce family energy costs

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Wrong headline. Should be:

    Can the major political parties deliver on anything?

  2. ^^^ haha … I like that Harry.

    A major concern of mine is that BTL is seen as a panacea (given historic price rises and the yield people see as being secure) BUT it is unregulated, costly to deal and maintain, illiquid, typically involves debt and very tax inefficient (particularly at the point of disposal/later life planning).

    Furthermore, as an asset class, the amount of government intervention taking (or about to take) place is frightening reflecting the fact that the price of property is not in line with historic demand pull inflation resulting in (for example) the Government injecting cash to help FTB even get on the housing ladder, helping those with low deposits and now looking to boost supply.

    We only need to look at the continent and Ireland as to what can happen if property moves out of line with it’s fundamentals and it’s concerning that, with all of the above, there remains a significant view of many that property is the be all and end to long term financial security.

  3. @Paul Stocks – I agree with you. Domestic and commercial property are asset classes and a balanced portfolio suitable for a clients risk profile is what we have to advise, so why are mortgage (only) brokers allowed to advise differently to those with investment permissions?

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