After all the bickering, jousting and one-upmanship preceding the vote for our next Prime Minister, the one man show that is Boris Johnson has now settled in to life on the throne at 10 Downing Street.
4 weeks in to the job and it is no surprise to hear Boris making promises and declarations of his grand intentions (which may or may not be fulfilled) to everyone and anyone who will listen.
One of those promises is that the UK will leave the EU on 31st October “do or die”. However, with negotiations currently progressing with all the exuberance of an overweight sloth, there is a large degree of uncertainty as to how things will unfold post-Brexit so why should those of us working in the residential sector remain (cautiously) optimistic about the housing market?
1 – There is an obvious need for more housing which can’t be ignored….
As reported widely at the start of 2019 (and previously) and regularly since, there is a dire need for millions of new houses to be built over the next few years in order to deal with the housing crisis, a fact acknowledged almost universally and regularly championed by charities such as housing and homeless charity – Shelter.
And whist there is on-going and regular debate with regards to the conflict between social housing not currently meeting demand and private developers supposedly hoarding land, the simple fact remains that there is a huge demand for new housing (social or otherwise) and that is not going to change any time soon.
2 – The New Build Market has remained strong
As Stewart Baseley – Executive Chairman at the Home Builders Federation recently explained – “Unlike the wider housing market, where transactions have dropped considerably from the historical norm, the new-build market has remained strong in recent months – a trend we expect to continue”. He goes on to talk about the positives of the extension to the “Help to Buy” scheme and how this ensures “the demand for new-build remains strong” resulting in builders being able to “plan ahead to increase output in the coming years, as demonstrated by the record high number of planning permissions being granted”. The one caveat to this is the fact in order to ensure this increased output can be effectively delivered, Baseley states “it is essential that post-Brexit, the industry continues to be able to access skilled labour from abroad”.
3 – Boris’ pledge to overhaul the current Stamp Duty Land Tax Threshold
Of course, it remains to be seen whether the pledged scrapping of stamp duty on properties valued up to £500,000 comes to fruition, but should this be followed through it would doubtless act as a catalyst for the market and would provide a much-needed boost to the sale of properties at the upper end of the scale. Likewise, the proposal to reduce top rate stamp duty from 12% to 7% could also play a key role in driving the prime property market, with those buying properties costing more than £1.5m saving considerable sums of money. And whilst at first glance it may appear the HMRC would be hit by a fall in revenues, this could be offset by the change leading to the exchange of a greater volume of premium properties.
4 - Traditionally, Boris Johnson and indeed the conservative party have championed a property-owning democracy
Yes, in his first speech housing was not at the very top of his priority list. However, this is fairly understandable given the nature of that first address which is obviously designed to try and rouse the troops and requires the Hollywood headlines of uniting the country, safer streets, better education and hospital upgrades. However, he did go on to say that he wants to see change that will give “millions of young people the chance to own their own home” and back in October at the Conservative party conference, he tackled the housing challenge directly and demonstrated his disgust in the fact that our rates of owner occupation for under 40s are lower than our friends over on the continent in France and Germany, noting that whilst this reflects on government failure over the past 3 decades, it also presents a significant opportunity for the tory government to rectify this.
It remains to be seen how things will unfold and if indeed Boris’ promises are ultimately as empty as his email inbox from chief EU Brexit negotiator - Michel Barnier, but for the moment, here at Novo we are looking to the future of the housing market with quiet optimism.