Hiten Ganatra is the Managing Director of Visionary Finance and a former councillor in Milton Keynes.
After 13 years in power what can we Conservatives say we have done to help millions of people own or rent their homes at affordable prices?
The housing crisis will be a key issue at the next General Election. We need to convince people that we can be trusted to deliver.
Chancellor Jeremy Hunt has an opportunity in his Autumn Statement next month to be creative and help get us out of the mess we currently find ourselves in.
He, along with Rishi Sunak, needs to show the electorate that the Conservatives are the party with the economic credibility and competence that Britain needs.
Conservatives believe in the importance of aspiration and showing that hard work pays. But first-time buyers are getting older, with the current average in the mid to late 30s age range. How will that attract young voters to vote for us?
We need to give people some hope that they can be homeowners, as Mrs Thatcher proclaimed so famously. Without coherent, joined up policies though, this will not be possible.
As someone who has worked in the property sector for 17 years, and started my own mortgage broker business in 2008, I have seen how Conservative housing policies have impacted on the ground.
Many of the realities for homeowners, landlords, and tenants prove that many of the Government’s policies are guilty of being short-term and not properly thought through.
If we take homeowners first, they are suffering as mortgage rates rocket. Many face huge leaps in their payments as they come off fixed rates. Some people have seen the rate jump from 1-2 per cent up to 5-6 per cent, and monthly payments shoot up from £400 to £1,500.
This is no small number of people either, with 400,000 homeowners coming off fixed rates in this quarter.
Why hasn’t this been addressed? Where is the accountability, or an impact assessment?
It was irresponsible for Liz Truss to expand our national debt in the name of economic growth. We are still feeling the effects of this failure now.
In the rental sector, both landlords and tenants are struggling to grapple with the economic pressures on them.
Landlords are having to put up rents because their costs have risen. The consequences for tenants of landlords feeling the squeeze, is easy to see with rents spiralling out of control. Only four or five years ago a three/four-bedroom house in Milton Keynes was achieving rent of £1,100 per month, and now it’s £1,500-£1,600.
I have a client who owns a one-bedroom property in Harrow, north west London, with a mortgaged debt of £130,000. The loan rate has jumped from 2 per cent to 6 per cent, and the rent no longer covers her costs. Service charges and ground rent have also shot up.
She is faced with the choice of selling at a discount, or raising the rent by 20 per cent in order to make the figures add up.
Landlords are also under attack on other fronts. Some London boroughs are charging between £800-£1,500 to licence rental properties. Why does it cost so much? With service charges costs from management companies on flats, which forms a large part of the London housing stock, close to £600 per month in some places, the pressures on landlords simply to make ends meet is creating dire consequences for many tenants.
It’s the poor old tenant who will bear the brunt of this through rents that seem to rise and rise. Tenants are not only having to grapple with these rocketing rents, but also, of course, the huge increase in energy costs as well as the general cost of living pressures.
Then we have seen landlord owners of blocks being hit with bills to replace cladding. It is fundamentally wrong to apply guidelines retrospectively, and hold a gun to landlords’ heads. We have a number of clients at Visionary Finance with cladding on their properties who have become mortgage prisoners.
Successive Conservative governments since 2010 have failed to build enough houses. We have had housing targets, but they are consistently missed.
Developers are seeing their costs jump by 20-25 per cent, so they are less able to build at the rate we need.
Planning obstacles don’t help, while local authority nimbyism is rife. Applications for developments of a certain size should be determined at a national level to get over these problems.
It comes back to the need for us to be creative when we search for solutions to the housing crisis.
On stamp duty, the thresholds could be raised to help people onto the housing ladder.
At the other end of the pipeline, we could look at ways to incentivise downsizing to free up larger properties.
Why don’t we consider capital gains tax breaks to encourage property investors to sell to their tenants?
There are pockets of creativity in the way banks and building societies issue loans. Barclays has a ‘family springboard mortgage’ that allows parents to use equity in their homes to act as a guarantee.
Skipton Building Society has launched a mortgage aimed at renters who have a good track record of keeping up with their rent payments.
The Help to Buy initiative, which probably continued too long, was backed with good intentions, but ultimately the main beneficiaries were developers. Now, many people are paying higher interest on the Government’s element of the loan, so there was a serious flaw.
Jeremy Hunt is said to be considering new help for first-time buyers in his Autumn Statement, such as an extension to the Government’s mortgage guarantee scheme, or a new type of ISA (Individual Savings Account) to help people save for a deposit.
These may well be good ideas, but will they be enough to address the chronic issues faced by this country’s housing provision? We need a comprehensive and coherent approach that proves we are serious about tackling the problems thousands of people are experiencing trying to find an affordable home.
It will be very difficult, if not impossible, for a Conservative election campaign to be successful next year without housing policies that give young people some hope they can achieve the dream of home ownership.