What will a Labour/Tory win mean for the property and mortgage market?
The number of people buying their own home has decreased considerably over the last seven years, with young people being worst hit because homes are simply too expensive and too competitive for first time buyers.
As part of its “Homes for all policy,” the Tories want another million new homes built by 2020, with another 500,000 by 2022, which seems to be an extremely rigorous policy and begs the question, exactly where will these homes will be built? The Tories have very kindly offered for 160,000 of these to be erected on its own land, which would also raise capital to inject into other services – a win-win for the government.
Another policy the Tories are hoping to push through is an updated Right to Buy scheme, allowing councils to sell homes after ten to fifteen years of construction, with the current tenants getting first refusal. This will not only open up an opportunity for those who previously thought getting on the housing ladder was beyond their reach, but it would also contribute towards freeing up more properties for house hunters to purchase.
These policies would also bring down the cost of house prices as developers are forced to be more competitive.
On the other side of the fence, Labour’s housing pledges follow the line of “Secure homes for all.” The party wants to establish an entire department committed to tackling the UK’s housing crisis to make sure any new homes being built are targeted at those wanting to jump on the housing ladder rather than investors that view it as a profit opportunity.
What Labour does want to do is help people who have been priced out of the market get on the housing ladder, by extending Help To Buy for another ten years. It also wants to stop local people being priced out of their local market, by limiting how many people on the scheme living outside of the area can apply.
Although that’s great for current residents who can afford their local area, those already living in high-cost areas such as London would struggle to move outside. It would also stop those looking to relocate for other reasons (such as a new job) being able to get on the Help To Buy scheme elsewhere.
With rising house prices, what’s clear for whichever party gets into power, is that affordable homes need to be made available to the hundreds of thousands of people who are paying above the odds for rental properties. Although it’s unclear what impact this will have directly on the mortgage market, lower-priced properties mean house buyers will be looking for smaller loans, offering a better loan to income ratio. This represents less risk to lenders and makes it more likely banks will be happy to lend the cash needed for everyone to buy a home.