The Budget on March 6th is already making headlines in terms of what it might – or might not – include, and perhaps unsurprisingly, there is a lot of noise right now regarding potential first-time buyer friendly measures that could be announced.
Politically, you can see why this Conservative Government, might feel it needs to engage with a younger voting demographic.
Michael Gove was doing the media rounds this weekend, seemingly suggesting that if the Government did not engage with the needs of younger, wannabe homeowners, there was an existential threat to democracy, although I’m not quite sure how he believes this might manifest itself.
It seems far more likely that what he means is that younger voters won’t vote Conservative now, nor will they vote Conservative in the future.
The opinion polls – when broken down by age group – reveal an almost overwhelming majority of younger voters much more likely to support Labour than the Conservatives in the next General Election, and one presumes the party is worried about some sort of ‘generational wipeout’ of their vote if these individuals continue this voting pattern.
Indeed, it seems much more likely that younger votes kept off the housing ladder are likely to be far more engaged with the democratic process in order to change Government and deliver them a greater opportunity of being able to buy.
However, while that could be the political thinking behind some of these current manoeuvres, the nitty-gritty of all of this lies in the measures that this, or any future, Government might want (or need) to introduce to try and get more first-timers into first homes.
We already have a stamp duty threshold exemption for first-timers for properties valued up to £425k, and the recent UK Finance Budget submission calls for this to be made permanent. At the moment it is due to change in March next year, and it seems like something of a no-brainer for whichever Government is in charge then to keep this active.
That stamp duty exemption covers about 90% of all properties bought by first-time buyers across the country – with the obvious exceptions being in areas of London and the South East – and it is therefore a significant benefit for individuals not to have to pay this tax.
UK Finance is also calling for amendments to the Lifetime ISA scheme, the reintroduction of a Help to Buy equity loan scheme with ‘a focus on regional variations in property values’, an expansion of the First Homes Scheme, and a review of the Shared Ownership consumer experience. In other words, nothing new.
The return of Help to Buy has been talked about so much, you wonder why the Government ended it in the first place, keeping the much less-needed and used mortgage guarantee scheme, which is expensive and inflexible for lenders to use, especially when there are much better and more flexible private alternatives available.
However, one also wonders whether returning some sort of Help to Buy equity loan scheme to market – presumably just for new-builds again – would be the game-changer some believe it to be. Especially when, once again, we have private alternatives available such as Deposit Unlock that work very well in this area but could undoubtedly benefit from greater Government support in the form of highlighting its availability and what it can offer first-timers seeking to buy a new-build home.
It would also be good to see the trade bodies put their weight behind the promotion of these alternative schemes.
Fundamentally though what we clearly need to focus on is the supply of new homes right across the country, and it should still be quite clear to even the most casual observer of the UK housing market, that we are nowhere near to building the number of homes required to meet demand.
Lest we forget, the UK population increased by approximate 7.5% between 2008 and 2018, and it is predicted to increase by 9.5 million by 2046. Where will these people live? Let alone the people who are struggling to find homes right now.
This weekend Michael Gove talked about more housing within old department stores and other empty high-street shops, relaxing planning laws in order to help this along, but this is not a new suggestion and you still need developers to have the money or inclination to be able to do this. And, of course, the big question is whether people would really want to live in these properties?
The Government effectively ditched its housing build targets earlier in this Parliament, under pressure from its own backbench MPs who are constantly assailed by people who don’t want new housing developments built in their constituencies.
There lies the nub of the problem. We clearly need homes, but where should they be built, who owns the land, how do you overcome community objections, do you have the logistics in place to cope, do the services around these developments exist to service them, and can you make them affordable homes that, for example, first-time buyers might purchase, rather than four/five-bedroom homes built to maximise the profit?
These are incredibly difficult questions to answer but they need to be otherwise we remain on a path of tinkering around the edges, rather than the fundamental change that is required. It’s also my view that housing is way too important to be party political – a national consensus and drive is required that can last a generation and multiple Parliaments. If only our politicians could agree on it, we might have a chance of delivering what is so obviously required.
Patrick Bamford is head of international business development at Qualis Credit Risk, part of AmTrust International
