News Review: Property
Mark Prisk has epic task ahead of him by
Nigel Stockton, financial services director,
Countrywide
Tis month news broke that Mark Prisk was
to become
our new housing minster and while he might have claimed to be both “surprised and de- lighted” by his appointment, he certainly hasn’t held back on his views about our past administration and what the market needs. In open letters to the national and local press (a growing trend among poli- ticians nowadays to “engage” with the masses surpassed only perhaps by tweeting MPs) the former business minister said “First of all, we need to build more homes,” before citing John Prescott’s “Top-down ap- proach” for building “Nothing but resentment”. Ouch.
Down to business So the gloves are off and Prisk has been busy during his first month in office aſter announc- ing further planning reforms to support growth, a £280m funding extension for First- Buy, a new debt guarantee scheme to build new afford- able homes and private rental properties plus new fund- ing to boost affordable house building volumes and bring empty homes back into use. Market stimulants such as
these are welcome news which seem to support the view of outgoing housing minister Grant Shapps who once said: “Building more homes is the gold standard upon which we shall be judged.” In reality fewer than 100,000 homes were started in the 12
months to June this year - a 10% decrease on the previ- ous 12 months. So what went wrong? Tat’s a difficult ques- tion for anyone to answer but the Joseph Rowntree Founda- tion released some interest- ing figures recently when it concluded that by 2015, even if all of the government’s cur- rent housing schemes succeed, we would still fall short of UK housing supply needs by some 310,000.
Builder view Coincidentally or not the latest raſt of housing initiatives were all announced by Mr Prisk just prior to a national residential conference where the great and good of the housebuild- ing community were quick to state that planning was not the issue and instead singled out mortgage funding as a major deal breaker for the industry’s recovery. In fact Steve Morgan, the
founder and chairman of house builder Redrow, said at the conference: “Te Financial Services Authority has over- regulated banks to the extent that they haven’t got the bal- ance sheets to lend – and they forgot how to lend as well.” He then added: “Tere’s
not enough competition; we need more competition in the banking sector.”
NewBuy needs targets Tis brings me nicely onto the subject of NewBuy, a mort- gage product launched amidst huge fanfare six months ago, which marked its six month anniversary this month. Latest figures from the Home Build- ers Federation reveal that there have been 1,300 reserva- tions since NewBuy’s launch
8 MORTGAGE INTRODUCER OCTOBER 2012
and there’s mixed views on what the future could hold for this scheme. Most commentators will
agree that the scheme is gain- ing momentum but to achieve any meaningful scale that will address the chronic short- age of transaction volumes, I think we need to start talking targets, pricing and part ex- change.
“Fewer than 100,000 homes were started in the 12 months to June this year”
Don’t get me wrong, New-
Buy was and still is a great idea in principle, and it could be argued that the scheme is gaining momentum but in the absence of lending targets and a pricing framework that reflects the LTVs lenders are getting through with these deals I think the industry will continue to feel short-changed by a scheme that promised so much. And for as long as the topic
of part exchange is given the cold shoulder then NewBuy will continue to fall short of market expectations. Yes part exchange really is a stick- ing point – especially if the £500,000 threshold is designed to entice home owners to trade up. Taking everything into ac- count I actually think NewBuy could, potentially, play a major part in the second-hand home movers market, particularly for homeowners constrained by a combination of equity erosion and the increased de- posit requirements stipulated by lenders today. Put simply,
NewBuy cannot be seen as a new entrant product if it is to produce the numbers required by Mr Prisk to put right the wrongs of old. So with that in mind I think NewBuy could be a major market stimula- tor - if we can find enough lenders willing to honour part exchange sales under the scheme.
Across the border As NewBuy reached its six month milestone, across the border the long-awaited MI New Home was launched by the Scottish Government. Te 95% indemnity scheme has a lower threshold than NewBuy at £250,000 with a modest aim to help 6,000 home mov- ers and similar to NewBuy, it seems the lenders have been slow off the mark in show- ing their support with just Nationwide and the Royal Bank of Scotland signed up to offer mortgages through the scheme at its launch this month. Let’s hope it’s a grower and the industry gets behind it. Elsewhere in mortgage
news, I read with interest that current repayment trends were indicating that by 2014 there could be more outright property owners than mort- gage customers. Tat sobering fact came courtesy of trends derived from the 2011 census findings as I pen this article I can’t help but wonder how far the industry has come in the five years since the infamous pictures of customers queu- ing outside the branches of Northern Rock hit the press. And the epic challenge that lies ahead for Mr Prisk and the industry as a whole before we can move forward in any meaningful way.
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