A Look At The Pitfalls In The Mortgage & Housing Industry


Given the number of unintentional consequences that intervention in financial services tends to throw up, it’s perhaps no wonder that (when it comes close to Budget day) I sometimes read the ‘wish-lists’ of various stakeholders and think, ‘Be careful what you wish for’.

That said, when it comes to most recent major political and regulatory forays into the mortgage and housing market, I think we as a market have been particularly perceptive about what might actually happen, rather than what the Government and the regulators think might happen.

Given the inter-connectedness of our industry it’s no wonder that so many policies and measures don’t just impact where they are supposed to, but have that ‘butterfly effect’ over many areas. Forewarning those who make such decisions is easy but by then the decision has already been made, and it is the industry that is often left to pick up the pieces.

On the 29th October we will all be hoping for some ‘good news’ for the property market – perhaps stamp duty will be looked at again? Perhaps the Government will not double-down again on private landlords? Perhaps downsizers will get some benefit? Perhaps CGT will be waived for those landlords selling to long-term tenants?

Perhaps all of this will have a cumulative impact and we’ll get an increase in purchase transactions that will justify the action? Perhaps though, it will keep landlords in the buy-to-let game for longer? Perhaps those fabled down-sizers don’t really want to move at all? Perhaps the supply of new and second-hand properties coming to market simply won’t pick up?

At the end of the day, are we simply playing at the margins here? The IFS recently said that the real problem in all of this is the supply of new homes, citing planning restrictions as a major factor, and thinking what many believe to be the ‘unthinkable’ – building on the UK’s Green Belt.

Of course, it’s not just a numbers game – those new-builds have to be affordable otherwise the ‘next generation’ will simply be priced out of them before they’re even constructed. Any yet we have developers beholden to shareholders who want the best profits from their land/developments and because they’ve been the only game in town for so long, new affordable home numbers are still not what they should be.

Perhaps the Conservative’s decision to allow councils to borrow more in order to build will help but again perhaps this has been left too late and we’ll be waiting many years to feel the benefit.

What we do know is we can trace many of our housing/mortgage market issues back to supply, and until this is addressed in a truly meaningful and impactful way, then our Budget requests may be heeded, and indeed introduced, but we’ll still be some way from getting a fully-functioning marketplace that works for the vast majority.

Richard Adams is Managing Director of Stonebridge Group