General Election: The 2017 Housing Manifesto Of The 3 Major Parties

General Election: The 2017 Housing Manifesto Of The 3 Major Parties

So, the General Election is looming. On 8th June, we face the decision of whether to carry on along the path of ‘strong and stable leadership’ promised by the Tories, or gamble on the prospect of the unknown – a Labour candidate who looks nothing like the party face we’ve been used to over the last two decades. Then there’s the Lib Dems, UKIP, or the Greens: of which there is much less to say.

But for investors in The House Crowd, the principal focus will be the housing policy offered by each of the major political parties. So, just to save you trawling through the party manifestos, we’ve done the dirty work for you. Here’s what you need to know about the 2017 housing manifesto for the Conservatives, Labour, and Lib Dems. Just an FYI – at time of writing, the Greens and UKIP are still yet to publish their manifestos.

Conservative Party 2017 Housing Manifesto 

The ‘Homes For All’ section of the Tory manifesto begins with a comment that states the blinking obvious: ‘We have not built enough homes in this country for generations, and buying or renting a home has become increasingly unaffordable’. So how do they plan to fix it?

The key, they state, is to build enough homes to meet demand. Again, pretty obvious. They identify that the effect of this would be to slow the rise in housing costs, allowing more ‘ordinary, working families’ to buy a home and also to bring down the cost of renting. Crucially, for investors, this will ensure that more private capital is invested in more productive investment, thus hastening economic growth in a secure way for the future.

The Tory manifesto pledges the delivery of one million homes by the end of 2020, with half a million more by 2022. They promise to deliver on the reforms from their Housing White Paper, freeing up more land for new builds in the ‘right places’, encouraging modern methods of construction, and by giving councils the power to intervene where developers do not act on their planning permissions. The Tories will also diversify who builds homes in the UK.

The plan also includes the building of better homes, supporting ‘high-quality, high-density’ mansion blocks, mews houses and terraced streets. And all this whilst retaining the strong protections that currently exist over designated Green Belt, National Parks, and Areas of Outstanding National Beauty. Thus, the government must build 160,000 houses on its own land, and rebalancing housing growth across the country – not limiting it to the south-east.

Housing for older people is also a priority, so the Tories plan to help housing associations increase their specialist housing stock.

The manifesto identifies councils as being to blame for the failure to build sustainable, integrated communities, fingering them as the ‘worst offenders’ and accusing them of building ‘for political gain rather than for social purpose’. The Tories plan to enter into new Council Housing Deal with ambitious, pro-development local authorities to assist them with building more social housing. ‘We will work with them,’ they say. ‘To improve their capability and capacity to develop more good homes, as well as providing them with significant low-cost capital funding’. As a result, they plan to build new, fixed-term social houses, which will ‘be sold privately after ten to fifteen years with an automatic Right to Buy for tenants’, the proceeds of which will be recycled into further homes. Compulsory Purchase Orders will be reformed, reducing cost and difficulty for councils to use, making it easier to determine sites’ true market value.

Finally, the Conservative 2017 housing manifesto pledges to work with private and public sector house builders to capture the increase in land value created when they build to reinvest in local infrastructure, essential services and further housing, making it more certain that public sector landowners benefit from the increase in land value expected from urban regeneration and development.

Labour Party 2017 Housing Manifesto

Labour have titled the 2017 Housing manifesto section of their election manifesto ‘Secure Homes for All’. It also begins by outlining the housing crisis, and pointing the finger at the Tories for failing to fix the housing crisis in the last seven years, stating that ‘Since 2010, housebuilding has fallen to its lowest level since the 1920s… rents have risen faster than incomes, there are almost 200,000 fewer homeowners, and new affordable housebuilding is at a 24-year low’.

Labour’s solution? Investing in building over a million new homes – 100,000 council and housing association homes a year by the end of the next Parliament.

Their plan for a new Department of Housing is ostensibly to ‘ensure housing is about homes for the many, not investment opportunities for the few’. We wonder whether they know about the democratising power of property crowdfunding in this area… and whether they plan to invest in the innovative finance model for real estate at all.

Whilst the Tories accuse local councils of building ‘for political gain rather than for social purpose’, Labour plans to give councils new powers to build homes. They plan to begin the biggest council building program for at least 30 years, ditching the Tories’ ban on long-term council tenancies so that council tenants can have a ‘secure tenancy in a home built to high standards’. The ‘right-to-buy’ policy would be suspended in order to protect affordable housing for local people, unless councils can prove they have a plan to replace homes sold like-for-like.

To avoid urban sprawl, Labour promises to start work on a new generation of ‘New Towns’ to build the homes needed, prioritising building on brownfield sites and – like the Tories – protecting Green Belt land.

The priority, of course, for Labour, is to build new council funds through their National Transformation Fund, which – they say – will ensure a ‘vibrant construction sector with a skilled workforce and rights at work’.

Along with all those council houses, Labour will also build thousands of low-cost homes specifically reserved for first-time buyers, giving local people buying their first home ‘first dibs’ on new homes built in their area. Labour councils across the country, they say, have already been building an average of nearly 1,000 more new homes than Conservative councils.

Just as the Tories do, Labour pledges to ‘not only build more, [but to] build better’. More homes will be insulated, and new modern standards for building ‘zero carbon homes’ will be implemented. Equally, the party plans to consult on new rules on minimum space standards, and introduce new minimum standards to ensure properties are ‘fit for human habitation’ and ‘empowering tenants to take action if their rented homes are substandard’. Like the Tories, Labour also identifies the need for older people’s housing, ‘ensuring that local plans’ address this need. There’s also their predictable promise to ‘reverse the cruel decision’ to abolish housing benefit for 18-21 year olds, a controversial move by the Tories that has had many up in arms.

Controls on rent rises, more secure tenancies, landlord licensing and new consumer rights for renters are all promised. They also promise an inflation cap on rent rises, and to make three-year tenancies the norm. They equally state that they’ll legislate to ban letting agent fees for tenants – which seems a slightly odd statement considering this is already in the pipeline.

Liberal Democrat Party 2017 Housing Manifesto

In the same vein as the two major political parties, the Lib Dems, too, begin their 2017 Housing manifesto section with the (not-so) news that the ‘housing crisis in Britain has become an emergency’. Their figures for increasing the rate of housebuilding are to double the current level to 300,000 new homes a year.

Rather kindly, the Lib Dems have broken their housing pledge down into bullet points, which makes it rather easier to share verbatim:

We will:

  • Directly build homes to fill the gap left by the market, to reach our housebuilding target of 300,000 homes a year, through a government commissioning programme to build homes for sale and rent. We will ensure that half a million affordable, energy-efficient homes are built by the end of the parliament.
  • Create at least 10 new garden cities in England, providing tens of thousands of high-quality, zero-carbon homes, with gardens and shared green space, jobs, schools and public transport.
  • Set up a new government-backed British Housing and Infrastructure Development Bank with a remit including providing long-term capital for major new settlements and helping attract finance for major housebuilding projects.
  • End the Voluntary Right to Buy pilots that sell off housing association homes and the associated high value asset levy.
  • Lift the borrowing cap on local authorities and increase the borrowing capacity of housing associations so that they can build council and social housing.
  • Scrap exemptions on smaller housing development schemes from their obligation to provide affordable homes, and strengthen the hand of local government to prevent large developers reneging on their commitments.
  • Require local plans to take into account at least 15 years of future housing need – focusing on long-term development and community needs.
  • Create a community right of appeal in cases where planning decisions go against the approved local plan.
  • Enable local authorities to: – Levy up to 200% council tax on second homes and ‘buy to leave empty’ investments from overseas. – Enforce housebuilding on unwanted public sector land. – Penalise excessive land-banking when builders with planning permission have failed to build after three years. – End the Right to Buy if they choose.
  • Help people who cannot afford a deposit by introducing a new Rent to Own model where rent payments give tenants an increasing stake in the property, owning it outright after 30 years.
  • Improve renting by banning lettings fees for tenants, capping upfront deposits and increasing minimum standards in rented homes.
  • Help young people into the rental market by establishing a new Help to Rent scheme to provide government-backed tenancy deposit loans for all first-time 62 Support Families and Communities 6 renters under 30.
  • Give British buyers a fair chance by stopping developers advertising homes abroad before they have been advertised in the UK.
  • Give tenants first refusal to buy the home they are renting from a landlord who decides to sell during the tenancy at the market rate according to an independent valuation.
  • Promote longer tenancies of three years or more with an inflation-linked annual rent increase built in, to give tenants security and limit rent hikes.
  • Improve protections against rogue landlords through mandatory licensing and allow access for tenants to the database of rogue landlords and property agents.
  • End the scandal of rough sleeping by increasing support for homelessness prevention and adequately funding age-appropriate emergency accommodation and supported housing, while ensuring that all local authorities have at least one provider of the Housing First model of provision for long-term, entrenched homeless people.

So that’s the top three parties covered. Clearly, there’s plenty to consider; lots of contrasts, but equally lots of crossover between opposing parties. Who’s getting your vote on 8th June? Actually, don’t answer that – no one wants to deal with another war in the Comments section on Facebook… there’s too many of those out there already.

Continued Increase in UK Property Demand Great News for Investors

Continued Increase in UK Property Demand Great News for Investors

In unsurprising news, RICS has announced that UK housing demand continues to increase. November’s figures show an increase in buyer enquiries by 3% over the previous month (up to 13% in November from 10% in October).

This demonstrates a third consecutive month of increases in the number of prospective buyers on the UK housing market.

“Although there are some signs that the numbers may begin to edge upwards in the new year,” says RICS Chief Economist, Simon Robinsohn. “The combination of macro uncertainty, the on-going supply shortfall, with stock levels around historic lows, and the myriad of tax changes impacting on buyers suggest that any pick-up in activity will be relatively modest. This is significant not just for the housing market itself but also for the wider economy given how much of consumer spending is tied in with home purchases.”

There are no signs that the current UK housing shortage is likely to ease off any time soon. New sales instructions rose from minus 3% to zero in the same period. Seller numbers, therefore, are slightly higher, but not enough to meet the continually strong demand.

Where there is a discrepancy between the sales market and buyer market like this, it implies that more people are either moving direct from rental accommodation, or are first time buyers. The buy-to-let market, however, is still strong, despite stamp duty hikes and tax changes implemented at the start of the 2016-17 tax year.

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UK Property Demand Rises Pleases Investors

All of this, of course, is great news for property investors. With such high demand for housing, and the value of properties still on the rise (albeit less so than in earlier months of the year), the chances of significant gains, in buy-to-let, new development or ‘flips’, are looking good.

Most of the UK is continuing to see an increase in prices, particularly in the North West, where the market is booming. Week after week, we are seeing fresh reports of the continuing rise in popularity of properties in the Manchester area.

This is, in part, due to heavy investment in development of the city’s infrastructure, and an influx of businesses relocating to the area.  These new businesses, bringing fresh jobs to the North West, are further increasing demand, particularly in the rental sector, as young professionals continue to find promising careers in the region.

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Is It Spring Time For Property Investment?

It is worth bearing in mind that, despite the property market being in the doldrums for the last 5 years, property investment as with all other markets, goes in cycles.

If you think of the property investment cycle as seasons in the year, we have been in winter for the last few years.  But the daffodils are starting to bloom and it looks like we may now be in spring – at least in terms of property investment. It may still be chilly, but it’s definitely getting warmer.

Pent up demand from first time buyers, low interest rates on savings and the banking crisis in Cyprus mean more people are turning to property as a safe haven. And this is particularly true of the British property market.

Britain is one of the most established property markets in the world, especially in terms of property investment financing. It is very different in terms of property supply and demand from other countries such as USA, Cyprus, Bulgaria and Dubai where the property prices were inflated because of demand caused by the perceived profits to be made (greed) and the sudden availability of easier borrowing rather than actual demand for accommodation to live in.

The UK market is very different.  I do not think there is any doubt more housing is required for the UK population. Without boring you with stats, for well over a decade, every survey I’ve seen has reported there is a massive shortfall in the amount of housing required to keep up with demand.  Further, the rate at which new houses are being built falls far, far short of predicted requirements. So the gap is widening every year.

It is interesting to note that every time The House Crowd buys a property – typically for about £50,000 – the rebuild costs for insurance purposes are upwards of £80,000 and often closer to £120,000. What that tells me is that if the cost of building new property is considerably more than existing stock (land values aren’t even taken into account in the example above).  Common sense suggests that few people will buy a new build property, when they can get a similar sized property for half the amount.  It is equally clear that developers aren’t going to build property unless they believe people will buy what they have to sell. And just to reiterate it: there is a shortage of housing which increases demand for available property.

It’s a complex relationship and there are differing viewpoints on how it works, but I believe that fairly soon builders will start building again in earnest. Once they start doing so, the price of old stock will be pulled up by the price of new builds as sellers realize they can achieve higher selling prices whilst still pricing their property competitively against new builds.

There are tentative signs that the property market is already beginning to warm up – you may well have seen the news headlines about average property prices now increasing at £25 a day. One factor for this is new investors putting their money into property as they are tired of the woeful returns provided by the banks and pension companies. We have noticed buy to let lending is becoming more readily accessible in the last 6 months.

But that is nothing compared to what will happen next year when the new government incentives kick in, giving buyers the ability to get on the housing ladder without raising a 20% deposit.

One thing I have learned throughout my time in property is not so much the price of a property but the affordability factor that is the biggest influence.  People’s income, the deposit required, the ratio income to borrowing permitted and interest rates all play a much bigger role than the actual price tag.

The government incentives coupled with low interest rates will have a massive affect and greatly increase the demand for property pushing prices higher (although salary levels will keep the increase in check to a degree)

That may be good bad or dangerous depending on your point of view. Some argue that it will create another bubble – and they may well be right. But in terms of achieving capital growth over a relatively short space of time (say the next 5 years), I believe 2013 will prove to be the ideal time to invest into property.  So get your sun cream and your sunglasses out.  A bright hot summer for property investment is on its way… Shame we can’t say the same for the British weather.