Leading online mortgage broker, Mortgages Online, is warning the Government not to blame the stagnation in the housing market just on Brexit, but to look at the policies that it has introduced over the past five years, and to its strategy for new house building.
The Nationwide Building Society Report issued this week indicated that house prices have risen just 0.2% on average across the country in the past 12 months, well below the rate of inflation, and below the bank interest rates available for simple savings.
Blaming this on Brexit though is naïve according to Paul Flavin, Managing Director of mortgages.online. “When George Osborne declared war on landlords by increasing stamp duty by 3% for investors buying houses for rental, and at the same time reduced the tax allowances for interest offset, this decline in the market was inevitable. It has very little to do with Brexit,” he claims.
At the time, the then Chancellor claimed that by removing many of the benefits for landlord investors, it would force more of the cheaper housing stock onto the market, and make it easier for first time buyers to be able to access their first home.
“The numbers have not borne that out at all,” says Paul Flavin. “In fact quite the reverse has happened. Landlords have been forced to increase the rental prices they charge just to balance their books, and first time buyers have still not had anything like the deposit they need to be able to obtain the necessary mortgages. The Help to Buy Scheme only applies to new house builds, which largely has nothing to do with investing landlords divesting their property portfolios, and much of the new build is, in any event, targeted at the executive market, where the profit margins are better for the builders.”
Paul Flavin is asking the Government to look again at how it should address the housing crisis in the country. “Of course we need to have more housing, both for rentals and the purchases, but to achieve this the Government needs to incentivise landlords to keep rental prices lower, by bringing back the reliefs and removing the penal stamp duty, it needs to incentivise house builders to address the first time buyers market, and it needs to make the Help to Buy Scheme applicable not just to new builds,” he says.
“There is a strong view, from talking to first time applicants approaching mortgages.online, that interest rates are likely to remain low for quite some time. With the increased rental prices they genuinely want to buy, but are simply unable to do so, and are forced to stay in rental accommodation which they can barely afford. It’s within the Government’s gift to redress the balance and provide the stimulus that the market needs, rather than simply and easily putting the blame on Brexit.”