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By Kate Davies

Executive Director, Intermediary Mortgage Lenders Association

OTHER FEATURES

A Long Term Vision for the Housing Market

Our housing market needs a long-term vision, and one which is co-ordinated across government and the wider industry. And it is paramount that this vision is underpinned by a strategy to address the pressing issues we are facing. 

For example, we don’t just need more homes – we need more homes of the right design, which are energy efficient and serviced by appropriate infrastructure such as roads, schools and hospitals.

Our latest manifesto identifies the key areas that we believe should be a focus for the mortgage market and the government in the year ahead.

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1. Housing supply and affordability - The imbalance between supply and demand in the UK housing market continues to keep property prices high. 

We remain convinced of the long-term financial benefits of home ownership – and this is underpinned by regular surveys which indicate that a majority of people do see home ownership as something to which they aspire. 

The British Social Attitudes Survey of 2018 reported that 87 per cent of those surveyed would prefer to buy rather than rent – a proportion which has changed little over the previous 30 years.

The First Homes scheme was announced in May 2021 and Phase 1 of the pilot projects is about to go live. It is still relatively small-scale and its success will ultimately depend on the appetite of developers to get involved and self-fund the initiative.  

We have expressed some concerns about how borrowers using the scheme to buy their first property would be able to trade up in the future, given the requirement to sell at a 30 per cent discount.

On affordability and stress testing we understand the importance of protecting borrowers from over-extending themselves: however, the current approach to affordability means that borrowers are often being tested at completely unrealistic rates.  

We have consistently argued that the combination of the Financial Conduct Authority’s affordability rules and the Financial Policy Committee’s additional stress test of three per cent above Standard Variable Rate has prevented numerous prospective borrowers, including many first-time buyers, from stepping onto or up the housing ladder. 

We therefore welcome the news that the Bank of England is to consult on removing the three per cent stress test.

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2. Serving non-standard customers - Our membership has always included a number of specialist mortgage lenders – and many of our “mainstream” members also offer a range of products for applicants who do not fit traditional “mainstream” criteria. Last year we surveyed consumers and members to find out more about perceptions of what may and may not be possible.  

The results were very positive – we believe that many consumers would be able to find a mortgage to suit them if they were to approach an expert mortgage intermediary to advise them on what is available in the market.  

The over-riding message is – you may not be eligible for the lowest rates advertised, but that does not mean that you will not be able to get a mortgage.  We will continue to emphasise this message and work with our intermediary colleagues to reach as many aspiring homeowners as possible.    

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 3. The Green agenda: improving domestic energy efficiency - We accept that the domestic property market must play its part in helping to achieve net-zero carbon emissions by 2050.  

But proposals for obliging property owners to carry out improvement works must be carefully thought-through and subject to strict quality controls if limited resources – both materials and cash – are not to be wasted. 

We also believe that EPCs – on which so much reliance is currently being placed – need to be closely examined and assessed to ensure they are fit for purpose.  

There is a danger that piecemeal policy will lead to confusion and a variety of unintended consequences: the task is immense but the government must lead in co-ordinating a strategy for planning, incentivising and funding work to improve the energy efficiency of Britain’s housing stock.

4. The Buy to Let market - Britain’s private rented sector is an essential component of the housing market, providing homes for one in five UK households. 

The sector has remained vibrant despite a ‘layering’ of policy changes introduced by previous administrations, but there could be more unwelcome measures in store, such as proposals to increase Capital Gains Tax rates to mirror income tax. 

IMLA has consistently argued that the government should resist making additional changes that may deter landlords from further investing in the Buy to Let market, as this could lead to significant numbers exiting the sector. 

This would only push rents up – making the tenure more expensive for all tenants, and leaving those who are trying to save for deposits with less disposable income and thus less able to do so.

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5. Finding a solution to the cladding crisis - Funding cladding remediation work on buildings following the tragic Grenfell fire remains a critical issue that the government and housing sector must find a solution to, and quickly.

The costs of remediation work on existing structures are estimated to be anywhere between £15 and £50 billion. 

Yet so far the government has promised just £5 billion of funding to support the removal or replacement of dangerous cladding.  

The Secretary of State’s announcement on January 10 for a proposal to require property developers to come up with £4 billion to fund removal of cladding, and new statutory protections for leaseholders, is welcome – but may still leave leaseholders facing large bills for remediation work to address other defects.   

Legislation must clearly identify where responsibility lies for defective construction and create a fair and proportionate system for funding ongoing maintenance of properties so that leaseholders are better protected in future.  

*Kate Davies is executive director of the Intermediary Mortgage Lenders Association 

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    The big problem, and one that I genuinely can't see changing any time soon, is that the Minister for Housing is an ever revolving door so we'll never really get a chance to see sensible policies followed through. It's also a poisoned chalice, bit like the old Northern Ireland Minister position in the past. I checked - we've had 10 Housing Ministers in the last 11 years!!
    Anyone remember Mark Prisk, Kris Hopkins? - no, me neither ..

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    A fantastic observation above. The start of the rot was the RTB your council house in the early 80;s, we have never been able to build to replace those properties which were lost, and we never will. There is too much short term thinking and too much sticking plaster politics, god help the generation to come, they will be the poorer for the failings of this and previous govts.

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