Without buyers Labour can’t ‘Get Britain Building’
Increase in mortgage rates means buyers can’t afford properties
Unless Labour has a solution that enables buyers to afford to buy houses, therefore incentivising builders to build, they will still be stuck with a housing crisis, a stagnant property market and an undelivered promise.
Heather Powell, Head of Property says:
The King’s Speech confirmed that announcements on housing already made by the Labour Government will be reflected in bills going forward, including planning reform to ‘Get Britain Building’. However, this promise of the delivery of 1.5m new homes needs to look at all sides of the equation, and without the ability to buy, those houses won’t be built.
National House builders have cut back on the number of homes they are planning to build as the increase in mortgage rates means buyers can’t afford properties. Without buyers, builders will make no profit from building, so they have no reason to build.
There is a similar problem occurring with Social Housing. Social Housing providers need housing to be built at a price that allows the properties to be let at an ‘Affordable Rent’, but this is an extremely challenging objective without support via government funding, or the release of government land on which affordable housing can be built, reducing the total cost of the homes. So, there is little incentive to build social housing, further hampering Labour’s housing efforts.
There is also the question of how Labour’s plans will affect new houses that are ‘Built to Rent’ – a term used to describe properties that have been built specifically to be rented out to tenants. Investors in these schemes may take some cheer from the omission of any reference to rent caps in the King’s Speech – but will still remember that a promise of controls on rents were referenced in the Labour Manifesto.
Those who are considering a long-term investment in Build to Rent properties need certainty on rents to allow them to invest with confidence, and Labour needs to provide that clarity so these schemes can continue to flourish and help meet their house building goals.
Heather adds:
Unless Labour has a plan to incentivise both buyers and builders, they will soon find their housing promise is very hard to keep.
Would you like to know more
If you would like to discuss any of the above, please speak to your usual Blick Rothenberg contact or Heather Powell using the form below.
Contact Heather
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