There is always a risk when trying to offer simple solutions to a complex problem that we end up doing nothing. We need a housing minister who can take bold decisions to help a stagnating housing market that is in danger of drifting into serious decline.
We have a new housing minister in Mark Prisk and I offer three suggestions for him in his new role. We need to build more houses. We need lenders to offer more loans to customers with smaller deposits and be encouraged to relax some lending criteria, with a common-sense approach to underwriting without fear of regulatory penalty. Finally, we need a coordinated response to the address the problems in the market which includes all market participants.
At the moment, we are building fewer new homes than at any time since the Second World War.
Rental price increases show demand rising, and in some areas spiraling, yet we remain an island with a strong social desire to own our own home. Single person household formation is growing year on year as we live longer but the biggest planning rule changes are for extensions and conservatories.
This could create a bigger political headache as local councils and individuals react to neighbours’ substandard extensions blocking the sun from their gardens.
These changes do not address the bigger planning issues that we need.
Lenders are caught between a rock and a hard place. What we need is capital relief for targeted lending to kick start young families with good jobs and income to own their own home and help lenders get back to underwriting basics.
The Bank of England’s Funding for Lending scheme is designed to stimulate the economy and is a step in the right direction. Lower costs for lenders will hopefully translate into lower prices for consumers in 2013.
Elsewhere, increasing longevity makes the future of the UK’s at-retirement market a significant social, political and economic issue.
With the value of equity in property worth hundreds of billions of pounds, how we unlock and incentivise equity will be a key issue for us all.
I continue to believe that the mortgage market will have an important role to play in helping solve this. Over time, we may see a move to models adopted by other countries, where mortgages are passed on to successive generations.
As an industry and society we are faced with emotive issues that require pragmatic solutions.
What we can’t afford to do is operate in silos. Builders, lenders, the FSA, the Treasury, brokers, solicitors, valuers and trade bodies all need to work together to make this happen.
Our new housing minister needs to get housing right up the political agenda and take action, otherwise constituents will take the decision out of his hands at the next election.
We need to put home ownership at the heart of our policy agenda again. Mrs Thatcher never forgot the benefit of this policy. So let’s talk ourselves into owning a home, not a lifetime of rent.
John Cupis is managing director of PMS