The Bigger Issue
Simple stepping stone Has government help for housing made any difference so far and what would y
There is always a danger when trying to offer simple solutions to a complex problem, or set of interconnected problems, we end up doing nothing. This is a danger that the new housing minister must not follow in the footsteps of his predecessor. It is fantastic that we have a dedicated housing minister but we now need one who can take some bold decisions to help what is a stagnating housing market which is in serious danger of drifting into serious decline. I offer three suggestions to the new housing minister to consider 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; and we need a coordinated response to the whole market which includes all market participants. We’re building fewer new homes since before the Second
World War, rental price rises show demand rising (spiralling), 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 grow older and live longer, yet the biggest planning rule changes are being proposed for extensions and conservatories. I believe this could create a bigger political headache as local councils and individuals react to neighbours substandard extensions blocking the sun from their Sunday lunch on the patio. These changes do not address the bigger planning issues that we need. Lenders are caught between a rock and a hard place. Let’s look at some capital relief for targeted lending to kick start our young families with good jobs and incomes to own their own home, and help lenders get back to underwriting basics. We can’t do all of this in silos. Builders, lenders, the Financial Services Authority, the Treasury, brokers, solicitors, valuers and trade bodies all need to work together to make it 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.
John Cupis, managing director, PMS
The real question here is whether government intervention is it making any meaningful difference in a market that is half the long term transaction average and is falling short of the new build demands required to keep pace with UK household population increases? No would be my answer, not at the current time but the opportunities are there for the taking. With our glass half full we can say that government intervention is welcome and we have seen improvements but it could make a significant and meaningful difference if Mr Prisk would take three significant steps. Prioritise industry engagement: Listen to the experts and come up with solutions that the industry and the consumer wants (not 25-year fixed rate loans, six applicant mortgages). We need transactions to move out of the 575,000-600,000 rut that we have found ourselves.
Implement lender targets and accountability: Gross lending targets would force lenders to play a role in the market’s recovery and give them accountability to lift mortgage volumes. Government schemes such as Funding For Lending represent a super opportunity that should not be wasted, so why is HSBC the only lender to publish its targets for both? Make planning the cornerstone: We’ve seen NPPF attempt to address some of the planning bureaucracy and we’ve heard new allowances will be implemented on affordability requirements to make way for new build projects but is that enough to address the endemic issues preventing developers from getting schemes off the ground? We need the government take a long hard look at why we have 300,000 units approved but the schemes still don’t make economic sense to developers. We firmly believe the first step to solving a problem is recognising that there is one. He is off to a great start. Mr Prisk appears to have spoken passionately about his desire to put right the wrongs of past administrations so we can only hope that he will put the above recommendations and those outlined in our Addressing challenges in the UK housing market report into action.
Nigel Stockton, financial services director,
Countrywide 26 MORTGAGE INTRODUCER OCTOBER 2012
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