The ‘Leeds Reforms’ the Chancellor announced in her Mansion House speech last week are an encouraging direction of travel for the Government and regulator, but lack the ambition needed to move the dial in our housing market.
Despite residential property transactions bouncing back with a 25% increase during May following the Stamp Duty driven slowdown in April, this figure is still 12% lower than 2024.
Affordability remains a pressing issue for hopeful homeowners who are struggling to get on the property ladder and, unfortunately, the Chancellor’s efforts to support first-time buyers are unlikely to have a meaningful impact on the market.
The Government has pledged to boost housebuilding and deliver 1.5 million new homes this parliament, and this has prompted a series of reforms to policy, with the introduction of the Planning and Infrastructure Bill and the National Housing Bank all launched with the intention to ‘Get Britain Building’.
Labour’s most recent efforts to address the country’s housing woes have focused on demand side policy and first-time buyers. Namely, Reeves introducing an increase in mortgages available at over 4.5 times a buyer’s income, simplified mortgage lending rules and a government-backed Mortgage Guarantee Scheme as part of wider efforts to ‘cut financial red tape’ across the British financial services industry.
Limited reform
The market needs greater momentum at the buyer end, but this set of measures falls short of what’s needed to stimulate demand and to jump-start the first-time buyer market.
Such measures lack additionality and any significant new offering. When the reforms are implemented, there will remain thousands of hopeful homeowners who will continue to be locked out of the housing market.
While the reforms may make small gains for consumers, the market is desperately calling out for changes that address both supply and demand in the housing market.
The reintroduction of the successful Help to Buy scheme seems an obvious conclusion. The first incarnation of ‘Help to Buy’ helped 400,000 buyers get on the ladder, yet still generated £1.8bn for the treasury.
Dues must be given to the Government for keeping housebuilding and housing on the agenda, but we need radical reform, not timid policy that tinkers around the edges of the market.
Familiar issues
Even outside of the buyer perspective, in observing the wider property ecosystem, the continued restrictions on high loan-to-value lending for new build homes sends the wrong message, promoting growth and removing red tape on the one hand, while retaining overly onerous constraints on the other.
The same issue persists across areas of development regulation, and the recurring obstacles in section 106 arrangements, burdensome compliance with Gateway 2 of the Building Safety Act, and planning guidance continues to cause a logjam in development.
Such restrictions do little to incentivise developers to build at scale, and scale is exactly what’s needed if the Government is serious about hitting its target this parliament.
Chris Gardner is CEO of property finance firm Atelier.