Why it's key the next Prime Minister sees UK housing in the round

Over the past weekend, the remaining candidates for the Conservative Party leadership started talking about the UK housing market for the first time in their campaigns.

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Steve Cox | Fleet Mortgages
21st July 2022
Steve Cox Fleet
"What was also missing from the future PM debate, was the consequences of not meeting that housing target."

Asked specifically what they would do to boost supply, they all came up with a variety of well-worn policy ideas, much of which I’m afraid has either been tried before or have actually failed to get onto the statute book, because of pushback from their own party.

Confronting NIMBY-ism, loosening planning restrictions, building on brownfield sites, encouraging smaller and medium-sized developers, giving local councils more control, were just a number of ‘ideas’ suggested, that many of us in the sector might rightfully say, we have heard it all before.

And, of course, when this issue was talked about, the politicians were ostensibly talking about the owner-occupation space; the need to get more people on the ladder through the provision of greater levels of affordable homes. It hasn’t happened in the last couple of decades, so what makes them think the same variety of policies will make it happen in the years to come?

This current Government set itself a target of 300,000 new homes to be built every year by the mid-2020s. I don’t wish to pre-empt what might happen over the next few years, but considering the UK has got nowhere near 250,000 over the past 20 years, then the likelihood is that 300,000 might be beyond us.

What was also missing from the future PM debate, was the consequences of not meeting that housing target. The most obvious one being, where do those people who can’t secure a property to buy, or do not have the means, actually live?

And the answer, of course, for the most part is within the private rental sector. A point which has seemingly been forgotten by a variety of Housing Ministers and Chancellors and Prime Ministers over the last 10 years-plus, given the variety of policies and measures designed to take supply out of landlords’ hands and put it into those of owner-occupiers.

Which leaves us with the current situation. A PRS lacking in supply, unable to adequately fill the huge tenant demand, pushing rents up for tenants, and with inflation also rising, meaning their ability to save for deposits is further undermined.

As Ben Beadle, Chief Executive of the NRLA said recently, “The last six years prove that it was a nonsense to think that cutting the supply of rental housing when demand was so strong would make it easier for those saving for a home of their own. Driving rents up just leaves tenants with less cash to save for a deposit.”

It is to be hoped that the next individual to walk into Number 10 as Prime Minister has the wherewithal and brain power to understand that pitting owner-occupation versus the PRS is not a housing strategy worth pursuing any longer.

That suggesting landlords are the ‘bad guys’ who should be stripped of their properties, thus taking more supply out of the PRS, is not the way to get more people owning their own homes. In fact it simply works against this.

Supply is critical right across the housing market, whether owner-occupation, PRS, social housing, you name it. The simple facts here are that you do not solve this issue by effectively paying off Peter to rob Paul – all parts of the market have to see supply growth. Anything else is counter-productive and merely ends up hurting the people you are supposedly trying to help.

What would I like to see? Well, for the first time in a long time, let there be an acknowledgement of the PRS and what it actually does for our housing market. An understanding that forcing landlords to consider selling up, doesn’t mean those properties end up in the hands of first-time buyers.

That actively placing obstacles in the way of those landlords who want to add further supply to the PRS by purchasing properties is crazy. That placed on a playing field which is more level, landlords will be able to increase supply, and rents will change to reflect that.

Send the signal out that, further supply is needed for the PRS to continue meeting its commitments, and that more supply, will actually mean more people can save to purchase a first home. Especially at a time when the cost of so many other services/products/needs is going up. Rental costs will be a major outgoing for all tenants, so it’s unlikely they will want to see rents rising considerably because property options are in such short supply.

Overall, it would be nice to think we can have a Prime Minister and Government that can see UK housing in the round, not as a series of silos which apparently are nothing to do with each other. The fact is that everything is interconnected, and the sooner we start with policies that recognise this, the better for everyone.

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