The UK housing market is certainly a hot potato in the run-up to the election with both the Conservatives and Labour promising an additional 200,000 new homes by 2020 and the Liberal Democrats going even further and promising an additional 300,000 homes. There is a growing feeling that a lack of affordable properties for first-time buyers in the UK has put this subject top of the political agenda and despite empty promises in years gone by, political parties will be held to account when we know the formation of the next government.
Funding for new properties
At this moment in time the focus seems to be upon the coalition governments Help to Buy ISA which sees the government adding £50 for every £200 invested by would-be first-time buyers. While there is most certainly some debate as to whether state funding of first-time buyer properties is the way ahead this has potentially added an additional £5 billion to the mix.
The Labour Party has promised to ensure that banks offering the Help to Buy ISA are forced to use these funds to invest in new property deals. They believe that this scheme alone could result in an additional £5 billion made available to the housing industry, underwritten by the UK government, to fund an additional 125,000 new homes by 2020. The Liberal Democrats promise of 300,000 additional properties by 2020 would-be part funded by an array of taxes on high end properties.
Will we see movement on new property builds in the UK?
For the first time for many years it does seem as though first-time buyers are a hot potato in the political arena. This is an area of the property sector which has been ignored time and time again in years gone by, by governments of all persuasions, but enough is enough. It will be interesting to see the actual outcome of these promises and what impact an additional 200,000 or even 300,000 properties would have on the UK housing market.
While there is no doubt that additional supply will dilute demand it will also bring in a whole raft of new entrants to the UK property arena. This will eventually increase liquidity, reduce the pressure on rents and perhaps bring some balance back to the UK property market. It will also be a welcome boost to the housebuilding sector which has undergone a number of booms and busts in recent times.
Will UK banks play ball?
When questioned, the Labour spokesperson was a little vague on how they would “encourage” banks to use Help to Buy ISA funds to invest in new build properties. This would be a major issue if Labour was to be part of the next UK government but many would argue that the banking arena “owes” UK taxpayers after the massive bailout of recent times. Whatever happens over the coming weeks we should see a definite movement on the number of new builds in the UK – which can only be good news for first-time buyers in the long term.