First published by Mortgage Solutions
In recent times, one thing the housing and mortgage markets have not been short of, is demand. Part of the reason that we see the outlook for the rest of 2021 and beyond as so positive in our sector, is the great swathes of demand that need to be catered for, even in the post-stamp duty holiday period.
However, it’s perhaps not consumer demand we need to be most concerned about, which is why I do not feel as strongly as some about the benefits of extending the stamp duty holiday and the likelihood of creating even greater demand.
Because the fact of the matter is that without a greater supply of transactions – both new-build and second-hand – we will still find ourselves confronting similar issues. Of course, calls to increase supply are nothing new – they have been coming thick and fast for the best part of three decades.
This Government announced in its Queen’s Speech a partial relaxation of planning laws to allow more housebuilding, but what’s interesting here is how local communities may react to the plans to vastly increase housing supply.
Politicisation presents obstacles to increase supply
In the recent Chesham by-election – won by the Liberal Democrats from the Conservatives – apparently a central battle ground centred around the new planning laws and the perceived detrimental impact they could have on an area, particularly in terms of potentially permitting development on greenfield sites.
It is thought the Lib Dems made a big play of pushing back against this as it ‘went down well on the doorstep’ with constituents. If issues like this get ‘cut through’ in Conservative seats that might be targets for the Lib Dems, then you can guarantee it will be an issue they keep pushing in other constituencies across the country. The Government might therefore feel the need to review its plans in this area if it’s not playing well with the core vote.
And, if that does happen, what will be the chances of boosting housing supply in the numbers that are required? Will we see more focus on former retail units perhaps? And what type of properties would need to be built on those sites to make them alluring to potential homeowners? Are we building enough on the brownfield sites in this country without having to go looking for greenfield locations where housing developments have the potential to generate significant local opposition?
Rebalancing to continue to generate new business
It is a perennial problem for our market and will clearly have an impact on the number of purchase transactions we see moving through the process and is likely to add a degree of uncertainty to the sector, especially for advisers who may well have benefitted from high proportions of purchase business over the last 18 months.
That said, advisers tend to find a way to generate new business, even if the purchase activity recedes for a period. Indeed, I would suggest that advisers are already planning for this slight market rebalance, prioritising remortgage/product transfer activity, ensuring that existing clients are in no doubt about where to return for their advice needs, ensuring they are widely diversified to be able to cover off clients’ protection and GI needs, and other relevant services they require.
Supply, or the potential lack of it, could play a greater role in all our professional lives going forward, but that shouldn’t be a surprise, and with a degree of forward planning and a focus on all the other opportunities that exist, advisory practices should have the tools to ensure this doesn’t negatively impact on their business model.
Rob Clifford is Chief Executive of Stonebridge