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The General Election and the housing market

Friday 16 June 2017

With no major party managing to muster a majority vote in this year's General Election, what does a coalition government mean for the property sector?

It has been a tense few weeks in the world of politics, firstly with the 2017 General Election, resulting in a Hung Parliament, followed by the appointment of a new housing minister.

The Conservative Party lost its majority in the 8 June election, in which former MP Gavin Barwell was left fighting for his Croydon Central Seat. He was ultimately ousted by Labour’s Sarah Jones, who beat him by 5,652 votes. Barwell has since been appointed Chief of Staff, with Alok Sharma taking on the role of Minister of State for Housing and Planning.

Most notable for his contribution of overseeing the publication of the housing white paper in February, Barwell made waves with his promises of fixing the broken housing market. It is expected that Sharma will follow the blueprint set out in the white paper, and see through the 29 proposals Barwell put forward.

Having been elected in 2010 as MP for Reading West, Alok Sharma was appointed as Parliamentary Under-Secretary of State in the Foreign and Commonwealth Office in 2016 by Theresa May.

Sharma is now the fifteenth housing minister in the last 20 years.

Senior industry leaders have however questioned the experience of the new minister, with the Intermediary Mortgage Lenders Association (IMLA) calling for an end to the housing minister merry-go-round. Expressing concerns that the turnover of housing ministers far exceeds the rate at which the average Briton moves home – once every 19 years – the IMLA has insisted on a cross-party approach to housing.

Perhaps even more concerning however, is the lack of cabinet position for the housing minister. With Brexit now set to dominate the political agenda, housing, which was a key concern during the election, looks to take a back seat.

Increased uncertainty has already knocked confidence in the markets, with housebuilders affected more than anyone, and whilst the Prime Minister has touched on the idea of a soft Brexit, if a hard landing out of the EU hits housebuilding and construction, the commitment to increase the building of homes to 250,000 a year by 2022 will fall flat.

So, with housing policy now resting on the shoulders of a new housing minister, and with a coalition government between the Conservatives and the Democratic Unionist Party (DUP) likely, what can we expect?

Whilst the Conservatives presented a generally sparse manifesto, with little reference to housing, the DUP’s manifesto had no notable mention of housing policy. The party's policy document however does promise a focus on improving housing, with a plan to increase investment for social and affordable housing. Although the DUP focus will be on Northern Ireland, any influence the party has on housing could be positive for the whole of the UK.

Mark Hayward, Chief Executive, NAEA Propertymark, said:

“The General Election result prolongs the period of uncertainty for the property market as we continue to face political instability. Buyers and sellers confidence has been weakened by the inability to predict how or if the value of their existing or future homes will be affected and it is likely that we will see activity in the housing market in terms of transaction level slow as Britain sits on its hands."

Following the announcement of a new housing minister, NAEA and ARLA Propertymark Chief Executives Mark Hayward and David Cox issued a joint statement:

"We call on the minister to build upon the underwhelming recommendations contained within the housing white paper and take forward a series of fundamental reforms to change the industry for the better," they said.

"Demand continues to greatly outstrip supply and more appropriate regulation of the sector is vital if we are to improve the experience of people looking to rent and purchase a home."

Prime Minister Theresa May has until Wednesday to strike a deal with the DUP.