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Lenders and brokers call for a more cohesive UK housing policy

Lenders in the UK feel there is no cohesive housing policy and not enough backing for private house building, social housing and shared ownership, a new survey has found.

Constant ministerial reshuffles are negatively impacting on housing policy and brokers and lenders would like to see more consistency as the current situation is adversely affecting the mortgage and property markets, according to the latest member survey from the Intermediary Mortgage Lenders Association (IMLA).

It says that when Gavin Barwell was made the new Housing Minister in July he became the sixth politician to assume the role since the start of 2010, following in the footsteps of John Healey, Grant Shapps, Mark Prisk, Kris Hopkins and, most recently, Brandon Lewis.

Some 59% of lenders and 42% of intermediaries say this state of flux has adversely affected the mortgage and property markets and 59% of lenders and 48% of brokers back the establishment of an independent, less party political housing department.

The role of housing minister hasn’t been a Cabinet level role since being downgraded in 2010, but 52% of lenders think reinstating this status might help while brokers are less enthusiastic about such a move with just a fifth thinking it would make a difference.

In terms of what areas the Government should focus its attention on with the Autumn Statement looming, brokers and lenders were united in believing that Theresa May’s new regime will continue to prioritise first time buyers despite confirming the closure of George Osborne’s Help to Buy mortgage guarantee scheme.

While undoubtedly an important issue, both lenders and brokers believed that private house building should be higher up the agenda, with the former reckoning it should be the chief concern. Lenders also identified social housing and shared ownership as key priorities for Government support, while brokers are keen to see more focus on last time buyers.

IMLA’s research also shows lenders have greater expectations than brokers that the Bank of England’s Financial Policy Committee will be granted powers of direction in the buy to let market by the Treasury. Two thirds of the former envisage this happening by 2017, while just 38% of brokers expect the same.

Looking at other regulatory issues, the industry has low expectations of Chancellor Philip Hammond reversing the decision of his predecessor George Osborne to reduce mortgage interest tax relief for landlords. Three quarters of lenders expect these plans to come to fruition, along with 52% of brokers.

While it is widely accepted that increased regulation has been beneficial for the mortgage industry in the wake of the financial crisis, there also is a growing feeling that recent changes may have muddied the waters slightly in terms of where ultimate responsibility lies between lenders and brokers.

Indeed some 59% of lenders and 58% of brokers feel that the current direction of mortgage regulation has blurred these lines of accountability.

‘Successive administrations have made pledges and promises to change this, but it’s never been fully followed through with any real comprehensive long term policy. Initiatives and schemes have stimulated bursts of activity and the mortgage market itself has adapted to evolving consumer needs over time, but until such fundamental issues as the continued under supply of housing, the backlog of unmet demand and the role of different tenures are properly addressed then the same issues will crop up time and again,’ said Peter Williams, executive director of the IMLA.

‘Responsibility doesn’t just lie with the Housing Minister though, and it would be good to see the Chancellor address the housing supply issue further in his forthcoming Autumn Statement. We would also like to see Philip Hammond delay or reverse the tax relief changes which will impact on the rental market and the capacity of that sector to provide homes for those who can’t get into home ownership. However, our member survey shows lenders aren’t too optimistic that this will happen,’ he pointed out.

‘Increased regulation since the financial crisis has been a necessary step to keep the mortgage market on an even keel, but our findings would seem to suggest there is more work to be done on that front. We have come a long way in the 12 years since formal regulation was introduced but despite that the process of introducing more controls continues,’ he added.

‘It is time to draw this to a close and ask the question of whether regulation has become overbearing and is starting to stifle innovation. The upcoming Competition Review provides an appropriate opportunity for reflection,’ he concluded.