As another of period of Westminster politicking comes to a close, now might be an appropriate time to look back at the performance of the government over recent months. A few themes stand out, but prevarication and hostility spring to mind most easily. Big defeats for governments and the bellow of John Bercow trying to restore “order” have also been defining features. However, a highly fraught legislative period should have been expected – whichever side you take, Brexit has been the most divisive political issue of the new millennium and reaching consensus on a way forward was never going to be any easy task.
After Boris Johnson’s failed attempt to make the UK leave the European Union with or without a deal come 31st October, a recent turn of events means we are now preparing for a general election in December – our first winter election since 1923. Will this break the political deadlock that has so far prevented any progress on Brexit from being made? Only time will tell.
The calling of a general election in December means two important things: first, any budget or fiscal statement will now take place in early 2020; and second, that the UK is set for a tumultuous political period in the immediate term.
Therefore, uncertainty looks set to increase again for business leaders. For those in the property market, which has been dampened by Brexit speculation since the referendum result, this is especially frustrating. House prices, according to Nationwide’s recent house price index, are stagnating, with the average rate of house price growth remaining below 1% for the 11th consecutive month. The question is now over how the government will proceed in the new year to finally give our sector the injection of optimism (and growth) it needs.
There has been a smorgasbord of touted, but as of yet unimplemented, reforms since 2017 that could be prioritised. Of particular note could be changes to stamp duty. The tax is one of the nation’s least popular, second only to inheritance tax, so reducing its catchment could pay political dividends. Much more importantly, raising the minimum house price for those it affects, as Boris Johnson suggested during his leadership campaign, could make it easier for people to get on and move up the property ladder. This could proffer market liquidity that would benefit those further up the chain, too, and be the kind of policy to boost the market in a potentially difficult post-Brexit landscape.
Greater market liquidity would be augmented by an informed market. Concerningly, recent research from Market Financial Solutions suggests a dearth of understanding amongst landlords when it comes to understanding reforms governing the buy-to-let market. Likely caused by repeated and rapid reform over the past few years, it revealed a significant portion (28%) of landlords do not understand what the abolition of Section 21 means. That is a disconcertingly high figure that indicates that many in the industry have not kept pace with government policy. If the kinds of reforms that are needed over the medium term are enacted, a major program of education will be needed to get landlords up to speed.
The third pillar of policy change I believe could help bolster the sector for the future concerns design and infrastructure. Many new homes are not sufficiently aesthetically attractive or well-connected to fully convince many members of the buying market that they offer a better lifestyle than the suburbs or towns and cities. The Conservative Party Conference in late September offered some reassurance that this is an area in the government’s sights.
Housing Secretary Robert Jenrick announced stricter, more aesthetically focused design guidelines for England as part of the ‘Building Better, Building Beautiful’ government inquiry. Similarly, the chancellor confirmed a roads package – that could help increase new build connectivity – worth £29 billion. The creation of more homes, particularly highly marketable ones, is one vital plank in the fight against the housing crisis, so these announcements are encouraging.
The past few years have been coloured by uncertainty for everyone in property. The future, if the requisite political leadership emerges, can be different. The Autumn Budget would have been the ideal moment for the government to implement the kinds of policy it has touted previously and I have reflected upon here. I now wait with keen interest to see if the opportunity to do so in the new year is taken.
Paresh Raja, CEO, Market Financial Solutions