There’s only one real place to start this month, following the monumental landslide victory for the Labour Party in this month’s general election, and given the size of that win, what it might now feel emboldened to do, particularly in the area of housing.
The new government appears not to want to let the grass grow under its feet. Why would it?
Without an effective opposition, and the Conservatives likely to spend the next few months – at least – fighting what is likely to be a particularly acrimonious leadership battle, Labour clearly have an opportunity to shape the agenda and potentially – even at this early stage – set the scene for a second term.
That’s certainly what David Cameron and George Osborne did in 2010.
Ramping up housing stock
Understandably, given what was within the manifesto – particularly around growing housing supply – the early talk is all about ensuring ‘delivery’ of these manifesto policies, and what it wants to achieve in terms of housing supply.
One of Labour’s moves already is reintroducing housing targets for England, setting clear goals for new home constructions aimed at tackling the shortage that’s driven up prices and made homeownership challenging for so many.
Adding to the mix, Chancellor Rachel Reeves quickly delivered a speech outlining Labour’s approach to boosting housebuilding. This includes amendments to planning laws to streamline the process and make it easier to build.
There’s also a notable pushback against NIMBY-ism aiming to overcome local opposition to new developments. Moreover, there’s a proposal to expand building on both brownfield and ‘grey belt’ land, providing more scope for construction while protecting green belt areas.
I think few would disagree with the need to boost supply considerably and, rather importantly, to focus on affordable homes given these are the types of properties that we need, not perhaps four- or five-bedroom homes that are completely out of the budget for would-be owners.
That said, a target of one-and-a-half million new homes is ambitious to say the least, given what this country has been able to achieve each year over the past few decades.
Could Labour take a more efficient approach?
One area however that, as you might expect, I am less keen on, is the ‘new’ mortgage guarantee scheme, which was part of Labour’s manifesto.
A somewhat odd proposal given such a scheme already exists, and take-up among lenders has tended to be sparse to say the least, because of the scheme’s lack of flexibility and its cost.
Far better, I would think, to focus taxpayers’ money elsewhere, given the private schemes available, the fact they are already established in the market, and they allow lenders to protect themselves against default risk without burdening taxpayers.
I think many would agree that resources currently allocated to government guarantees could be better directed towards initiatives like increased housebuilding, leveraging existing private sector solutions to promote market efficiency, perhaps even in terms of improving the home buying and selling process, which has something like a 33% aborted transaction rate each year.
This costs everyone involved millions of pounds in wasted money, not forgetting resources.
Working together to improve UK housing
What we do know, however, is that effective implementation of Labour’s housing agenda will require close cooperation between government entities, housebuilders, planners, lenders, and insurers, to name but a few.
Clear communication and efficient processes will be essential to ensure new policies are rolled out effectively and fairly across different regions and demographics. Ongoing evaluation will also be vital to gauge the impact of these reforms and make adjustments as needed in a dynamic housing market.
For mortgage advisers and lenders, staying informed about these developments will be paramount. Understanding the distinctions between government schemes and private alternatives will enable advisers to provide informed guidance to their clients, particularly first-time buyers, who will probably need the most handholding and for whom there are a growing number of options.
This knowledge will empower first-time buyers to make well-informed decisions aligned with their financial circumstances and homeownership aspirations, and it is advisers who are best placed to be the go-to professionals to help them.
Overall, even at this early stage, the Labour government’s housing plans present both opportunities and challenges for first-time buyers. While ambitious housing targets aim to expand access to homeownership, the debate over the role of private mortgage insurance underscores the importance of fiscal responsibility and market efficiency.
Finding a balanced approach between public policy objectives and private sector solutions could be key to addressing the housing crisis and fostering sustainable homeownership across the UK.
