The new government looks unlikely to alter a broadly stable position. At a local level though, its property policies are intended to disrupt.
Looking at our year-on-year national figures, overall sales are up by 19% and new instructions by just over 30%, making for a refreshingly active market. Pricing remains sensitive and bank interest rates look compatible with modest capital gains over the coming months. Furthermore, reports of this ‘steady as she goes’ position are remarkably consistent across our country house offices and markets, from Cornwall to Northumberland. Rental demand, in contrast, is significantly ahead of supply, resulting in sharp rent increases, especially for new lettings in the south east.
Our positive experience this year to date – admittedly largely confined to the middle and upper value markets – is echoed by broader official statistics. Bank of England reports show mortgage approvals for house purchase almost back up to levels typical for 2014 to 2020 (see graph overleaf) and expectations (led by the Bank) are that interest rates will now fall, if slowly. Meanwhile, Land Registry figures show that, after a dip last year, year- on-year price growth for detached houses has moved back into positive territory, if only just.
Above: North Devon £1,150,000 guide (Barnstaple)
Given the cumulative size of last year’s five interest rate increases and the on-going stream of existing owners reaching the end of their sub-2% fixed rate loans, some are surprised to see price increases at all. Nevertheless, current sales suggest that modest capital growth, along with most other aspects of this picture of stability, will continue. In no small part, we suspect, this is because expectations of our new government are so limited.
Not radical?
By common consent, our new Prime Minister and his team have little room or appetite for radical economic change. Markets – including our own – have long factored- in their victory, shrugged and moved on.
Right: Staffordshire £3,500,000 guide (Alderley Edge)
In relation to property concerns, some of Labour’s manifesto promises also appear to be ‘more of the same’. Those renting privately, for example, are assured that Section 21 (‘no fault’) evictions will be banned immediately, but this is something tenants have been promised for a long time. Similarly, for owners of long leasehold property, there are commitments to continue existing actions against abuses of power by freeholders, such as in relation to ground rents and excessive service charges.
The manifesto does though, include some more ambitious, arguably radical changes. These include “steps to ban new leasehold flats and ensure commonhold is the default tenure”, which looks dry but concerns the whole legal basis of ownership. For owner- occupiers in apartment blocks, switching to commonhold would bring opportunity and responsibility and, along with them, the potential for both community and conflict. If you are one such owner, it is probably worth looking at the Law Society recommendations on which the reforms will be based*.
Momentous as it might be, the impact of commonhold will take years to be widely felt. In contrast, if you live in, or want to live in, an area currently targeted for development, then government plans to ramp up the pace of new house building could generate rapid change. Promises such as ‘exemplary development to be the norm’ look reassuring to all, as does a desire for new homes which ‘promote nature recovery’. Other promises, though, are more divisive and less vague.
The following stand out: • Restoration of mandatory housing targets [for local authorities] • Strengthened presumption in favour of sustainable development. • A “new generation of new towns” • “Where necessary Labour will not be afraid to make full use of intervention powers to build the houses we need.”
The commitment to build is clear. Less clear is how this government will ensure that quality and environmental commitments do not get brushed aside in their haste to act.
It is past failures on this front which, in our experience, have fuelled deep local resistance to development, not objections to new homes per se. The more that this new administration can win battles over minimum standards at the national level, the easier the passage of new local development, should be. If, as expected, the overall market can continue its current encouraging levels of both supply and demand, that should make the corporate and community consents needed, easier to reach.
*Reinvigorating commonhold: the alternative to leasehold ownership, published by the Law Commission July 2020 (Law Com No 394)
Main image: Essex £4,950,000 guide (Ipswich)
