What Does Liz Truss’s Premiership Mean for Housing and Mortgages?
New prime minister Liz Truss has plenty of issues vying for a place on her list of priorities. But what has she said about housing and mortgages?
Homeownership and the cost-of-living crisis
This cost-of-living-crisis dominated the leadership race, with UK homeowners keen to know each candidates’ stance.
Ms Truss has been quick to promise her government will tackle energy prices and seek to reduce taxes. But putting money in people’s pockets will only make a difference if housing is affordable.
The term ‘affordable housing’ was around before the cost-of-living crisis but is often seen as an ambiguous phrase. Looking back at previous statements by the new Conservative leader, though, provides a glimpse of what it might mean to her.
In a 2019 interview, she suggested building a million new homes on greenbelt land around London to help first-time buyers under 40 get on the housing ladder – a move she said would increase supply and therefore help regulate prices.
She is also on record as saying villages should be allowed to “expand by four or five houses a year without having to go through the planning system”.
It remains to be seen whether such a policy would garner sufficient support – particularly given her limited backing within the parliamentary Conservative Party that would surely oppose such a move.
One policy likely to secure popular support is making lenders consider rental payments when assessing affordability for mortgages. It’s hard to see where the opposition for this would come from, and it will almost certainly be seen as a helping hand for first-time buyers.
What about the struggles facing current homeowners?
But it’s not just those seeking to get on the housing ladder who want to know the new PMs thoughts on supporting homeownership.
But with interest rates set to rise further, it’s worth noting her stated intention to re-examine the Bank of England’s mandate and assess whether it is “fit for purpose.” Coupled with her own economic advisor warning planned tax cuts could see interest rates rise to around 7%, the very idea of this change looks like a non-starter.
And we don’t yet know her attitude towards the Support for Mortgage Interest (SMI) scheme that helps homeowners receiving certain benefits.
Ms Truss has long been an advocate of abolishing what she once described as “Soviet top-down housing targets.” Some homebuilders say the move would lead to fewer new homes. Although she believes it’s the way to kick-start home-building programmes that benefit local communities.
This is a view shared by her newly appointed housing secretary, Simon Clarke, who was a staunch supporter of her leadership campaign and tweeted in May that it would be a “disaster for the Conservatives” if “we do not build the homes we need, where we need them”.
As a one-time local councillor involved in planning decisions, Ms Truss argues she understands the pressures of local planning restricted by a “one-size-fits-all” approach dictated by central government.
Current legislation, she says, is “too bureaucratic, too slow and too complex”.
It should come as no surprise then, that she has vowed to ditch the government’s existing policy of building 300,000 new homes a year by the mid 2020s, with a promise to focus instead on “local consent”.
One way of achieving this, is the planned introduction of “investment zones” – redevelopments that incentivise construction via less restrictive planning regulations and a reduced tax burden.
Creating synergy between housing policy and sustainability
The future of green energy has been brought sharply into focus by the recent price hikes in gas. And the new PM has made it clear she supports the drive towards net-zero – but not at the risk of harming businesses or consumers.
This will be music to the ears of homebuilders. As will her stated intention to axe ‘nutrient neutrality’. The controversial scheme, introduced following a ruling by the European Court of Justice in 2018, is firmly in her sights. A move welcomed by developers who say it’s responsible for delays in building around 120,000 new homes nationwide.
Interestingly, Simon Clarke has been vocal about both the need to tackle climate change and his desire to help first-time buyers get on the property ladder.
Ms Truss has also promised a scheme to help insulate homes. A statement that should pacify homeowners seeking reduced energy bills and environmentalists who say building stock accounts for around 25% of the UKs greenhouse gas emissions.
When will we find out what Liz Truss has planned for the housing sector?
Ultimately, what the industry wants is stability and a clear direction. And that starts from the top.
Simon Clarke is now the third minister to take on responsibility for housing in the past twelve months. Presuming he’s in for the long haul, the fact that his views are shared and endorsed by Liz Truss, should provide consistency and confidence to developers, buyers and mortgage providers.
Exactly what shape the market takes is yet to be revealed. But with less than two years until the next general election, and a clear public demand for the new cabinet to tackle both the current cost-of-living crisis and the wider issue of housing, it surely can’t be long before we find out what Liz Truss’s plans for mortgage and the housing sector are.