Weakness at the heart of the UK government could be bad news for housing

Some think the UK general election was putting a dampening effect on the property market and while I do not necessarily agree with that, the hung parliament sure will. The property market thrives on confidence and the election result is probably the worst it could be for the industry.

While there is now much talk of a socalled ‘soft Brexit’, it is not clear how this might impact on the economy which is one of the main drivers of the housing market in the UK. It could be argued, for example, that continued free movement will alleviate concerns voiced by the building industry that it needs European workers.

But it does mean that when the proper Brexit negotiations start this month the UK is going in from a weak bargaining position. Indeed, although she says she wants to serve for a full term of five years, there is no guarantee that Theresa May will be in power in five months’ time or even five weeks’ time.

Weakness breeds weakness. It is already being said that major policies outlined in the Conservative manifesto before the election, such as paying for care in retirement and grammar schools expansion, will now not go ahead. But what of housing?

The man who was behind what was regarded as a highly positive and successful Housing White Paper published earlier this year, Gavin Barwell is gone, no longer minister for housing and planning, having lost his seat at the election. This is not good news. Indeed the fact that yet again housing changes its minister in charge is a sign of the weakness that is seeping into government.

If a government does not care about housing to the extent that the minister changes on an almost annual basis then where is the confidence that it cares about tackling the housing crisis and building the homes it has promised and that the country desperately needs.

Motivated buyers and sellers have not been put off by the politicking of the last two years, with two elections and the European Union referendum and now the change of that stability that May promised is dwindling. The hung parliament was unexpected and it is a frustrating result, but I suspect that political machinations in the House of Commons as policy and bills are tweaked (watered down) to ensure they are passed and a desperate attempt to make Brexit work could overshadow the need to build new homes.

The big question is – will a weak government trying to deal with EU negotiators, who quite frankly must be laughing at the turn of events in the UK, really have the time and energy to reform the planning system and make sure the right kind of homes are built and in sufficient numbers?

At the same time the rental market has stagnated, rents have not risen for a year in many parts of the UK, according to the latest Countrywide index, buy-to-let landlords are burdened with tax issues and not likely to push forward with investment, price growth has slowed and sales are down. It is low interest rates and a severe lack of new homes coming onto the market that is keeping the sector going. People seem reluctant to move unless they really have to and even then they are faced with a shocking lack of choice. A slowdown in housing starts in London suggests that completions may start to sip in around 18 months’ time.

It has been said that the UK housing market is taking everything that is flung at it, including the referendum and unexpected decision to leave the EU. But this cannot go on forever, especially if housing moves down the political agenda. Whether we like it or not, political uncertainty will continue to influence the market.

The hope is that whoever takes over as Housing Minister will press ahead with reforms to planning in robust and thorough manner and that with all political parties supporting housing growth the provision of quality new homes at the right price can go ahead and not be stalled amid Brexit deal panic.