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Thinking Cleary: Whoever wins, new homes are crucial

Alan Cleary, managing director at Precise Mortgages, casts a critical eye over the industry 

Alan Cleary

As I write this column, I am eagerly awaiting the results of the general election and have my fingers crossed that, by the time you read this, one party will have achieved a majority. 

Both the main parties have housing high on their agenda and, specifically, the building of new homes. The Labour party has stated it will get 200,000 homes built per year by 2020 and the Conservatives have said they will build 400,000 new houses on brownfield sites and 200,000 starter homes. Were these soundbites designed simply to woo voters or can they in fact be delivered?  

Looking back to history for some insight, it indicates that the targets set are achievable – albeit I had to look back a long way. Post-war Britain enjoyed a couple of decades where 300,000 new homes were built every year and, on a few occasions, up to almost 350,000. No doubt the destruction caused by bombing raids had a profound effect on post-war politicians but from the late 1960s the number of new-builds started to decline. That trend has continued to this day where we are now building fewer than 150,000 homes a year.  

Both main parties have presided over a declining housing stock. Back in 2000, the Barker Review of Housing Supply concluded that the UK needed to build 250,000 new homes each year in order to prevent spiralling house prices. The best we have done since then was in 2006/07 when 219,000 new homes were built. Unfortunately, however, the financial crisis put paid to that and we hit a post-war low of 135,000, mildly recovering last year to 140,000.

Based on the stats, politicians – at least of late – do not have a great record in delivering on the new-build promise and the consequences are now at crisis level.  

If I were in charge for a day, I would take housing policy out of the political machine and hand the powers to an independent Bank of England. Housing strategy needs to be looked at in 50-year cycles but, with governments having only five-year terms, this leads them to make tactical decisions and miss the glaringly obvious bigger picture.  

Surely, the time when housing is used as a political football should come to an end. If the Bank of England, put in charge of housing policy, had a 50-year plan, I doubt very much if it would have allowed the country to run out of bricks.

At the time of writing, virtually every poll is predicting that no single party will win an outright majority. Therefore it is possible that one or more of the smaller parties will become kingmaker.

The Liberal Democrat pledge is based on building 300,000 new houses a year, creating at least 10 new garden cities and setting up a Rent to Own scheme. Ukip wants to build one million homes on brownfield sites by 2025 and the SNP, the least ambitious, wants to see investment to create 100,000 affordable homes.

Despite my views, I doubt if the necessary powers will be handed to the Bank of England. But whatever the outcome of the election, the house-building crisis will force those in power to get serious and tackle the issue.

Rather like the shortage of bricks, there is a shortage of lenders active in the new-build space and that is one of the reasons why I am putting new-build growth high on our agenda. At the moment, unless one is a grade A, employed customer with an exemplary credit score, getting a mortgage for a new-build is just as difficult as getting one for a second-hand property. 

It does not make any sense to me that just because a person is self-employed or was late paying a mobile phone bill a year ago they should be excluded from buying a new home. 

There is a need for both lenders and intermediaries to play a role if the country is to finally crack the proverbial new-homes nut.

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