The next two months feel like a pivotal moment for the UK mortgage and housing markets, certainly from a political point of view, as we enter party conference season, followed by the Autumn Statement which will take place on 22nd November.
Just how much of a priority our industry will be for the political parties is likely to be tested in the coming weeks, particularly for the Government who need to bring some much-needed positivity back to the market after presiding over a, quite frankly, awful 12-month period.
The facts of our market are clear for all of us to see – rates high, mortgage payments up, purchase transaction numbers bouncing along the bottom, affordability challenges for many borrowers, property supply still poor, new-build numbers down, stamp duty high, rental demand strong but landlords unwilling or unable to add to portfolios – we could go on.
It is not a pretty sight, and without the strength of the remortgage and product transfer (PT) sector, many advisory firms might be having greater difficulties.
In this context, no-one should be surprised that the advisory profession is calling on comparable procuration fees for PT business with remortgaging. The longer this market is maintained, the louder those voices will get.
So, what could be done, and what does the Chancellor need to announce as a bare minimum when he takes to the Dispatch Box on the 22nd November?
Well, it might be viewed as a blunt tool, but the most obvious dial that could be moved is, unsurprisingly, stamp duty.
No-one in this market will need telling of what a difference a stamp duty holiday can make – we saw that during the pandemic – and even though we’re in a different rate environment now and we don’t have the same lockdown-induced pent-up demand, it would have a positive impact.
A stamp duty holiday would be especially relevant to those existing owners who are already on the ladder, but see such high costs at present in actually trying to move up it. The second/third/fourth steppers who would like to move but see thousands of pounds of stamp duty tax as a major obstacle to their ambitions.
We should also urge the Government to look at the whole issue of downsizing and the stamp duty/cost of moving barriers that are currently placed in the way of those older individuals who are living in homes way too big with unused rooms, but for whom the cost of moving – particularly stamp duty – is just too large for them to make it happen.
This has been exacerbated by the growing influence of equity release for older homeowners, but there will still be considerable numbers of individuals who would ideally like to downsize but feel the costs of doing so are simply wasted money.
They are being told, you can either release £50,000 from your home now and live there or you can downsize and pay £50,000 in total moving costs – no wonder more people are staying put, but that presents a real problem in allowing people to move up the ladder and move into the types of homes they need, specifically families.
Some sort of stamp duty holiday or permanent solution which incentives homeowners to downsize should certainly be considered.
Moving to those who have yet to even get on the ladder. We’ve all seen the negative impact the end of Help to Buy has had on the market, not just in terms of the number of new-builds that are being developed – down considerably – but also in terms of getting first-timers into a first property.
It’s a simple fact that many people can’t buy without Help to Buy – the clue is in the title, and we’re not surprised that the rumour mill is whirring about it being brought back in some guise, perhaps with the consideration that it should (once again) not just be the preserve of first-time buyers.
One wonders if the Government being defeated in the House of Lords on its attempt to relax the nutrient neutrality rules means it will want to look again at the ways and means by which it can incentivise the building of more homes? At the moment, developers seem happy to landbank, with the land retaining its value and the homes they can build seemingly dropping in price.
Why build in this environment?
We would definitely urge the Government to use both a carrot and stick approach to developers, resurrecting Help to Buy but insisting that developers build and don’t landbank, in order to get access to the scheme.
Whatever happens, we need a movement change in the mood music that has engulfed our sector. The last 12 months have been really challenging, and the potential for some small movements in rates off the back of inflation dipping, is not really enough to provide the real shot to the arm our industry needs.
We are, by all accounts, about a year away from a General Election – action will speak way louder than words right now and it’s within the Government’s armoury to deliver it.
Rory Joseph is director and Sebastian Murphy is head of mortgage finance at JLM Mortgage Services, the mortgage and protection network
