//  by 

There’s a renewed sense of confidence in the property sector following the Conservative election victory last week. In this blog, I look at what its election manifesto says about housing and how this may impact developers, housebuilders and the housing market.

It didn’t take long to find out what the property industry thought about the Conservatives’ election victory. Shares in housebuilders made some of the biggest gains on the FTSE 100 on Friday morning with Persimmon rising 12.9%, Taylor Wimpey up by 11.4% and Redrow by 9.5%. And estate agents reported a surge in buyer confidence, with north London agent Glentree reporting that buyers from Asia and eastern Europe had agreed to respective £28m and £25m house purchases immediately after the result.

The mood of post-election optimism was summed up on Friday by Nick Burchett, co-fund manager at Cavendish Asset Management, who said: “Less of the oven ready, and more of the shovel ready for housebuilders this morning following the Tory victory. Tax incentives, such as the 30% discount for first-time buyers, is likely to get transactions moving imminently and demand for construction labour will also increase.”

The 30% discount for first-time buyers Burchett refers to is one of the pledges in the Conservative manifesto, which says: “We will offer more homes to local families, enabling councils to use developers’ contributions via the planning process to discount homes in perpetuity by a third for local people who cannot otherwise afford to buy in their area. Councils could use this to prioritise key workers in their area, like police, nurses and teachers.”

Laudable as this sounds, as ever with broad pledges such as this the devil will be in the detail. What does “local people” mean in this context, for example? As Savills has pointed out, “it remains unclear how much demand there will be from banks to lend on these properties, particularly if they are restricted to local people if they need to sell the property on”.

What else can we expect from the new government in relation to the housing market?

Getting on the housing ladder

The manifesto identifies that the biggest problem young people face in getting on the property ladder is the deposit. To overcome this, the manifesto says it will “encourage a new market in long-term fixed-rate mortgages which slash the cost of deposits, opening up a secure path to home ownership for first-time buyers in all parts of the United Kingdom”.

There’s no doubt developers would welcome a new tranche of first-time buyers so it will be interesting to see how effectively the government is able to “encourage” this new mortgage market. At least developers can take comfort in the Conservatives’ commitment to extend Help to Buy to 2023 and “review new ways to support home ownership following its completion”.

300,000 new homes a year

What about the bigger picture, the all-important number of homes built per year? The Conservatives say they remain committed to progress towards its target of 300,000 new homes per year by the mid-2020s, but soften this by saying it will build at least a million more homes over the next parliament, i.e. only 200,000 a year (compared to 241,000 in 2018/2019).

Infrastructure first

Numbers alone don’t tell the whole story, and it is vital that new homes are supported by the appropriate infrastructure. The manifesto pledges “infrastructure first” and says: “We will amend planning rules so that the infrastructure – roads, schools, GP surgeries – comes before people move into new homes. And our new £10 billion Single Housing Infrastructure Fund will help deliver it faster.”

This is welcomed, as is the promise to overcome one of the biggest obstacles to building new homes, namely the chronically flawed planning system. The manifesto says it will “make the planning system simpler for the public and small builders”. If they can pull this off, it will make a huge difference. Also applauded is the undertaking to support self- and custom-built homes and modern methods of construction.

Affordable homes and a stamp duty surcharge

Finally, the manifesto commits to renewing the Affordable Homes Programme to support the delivery of “hundreds of thousands of affordable homes. This is a key part of our efforts to prevent people from falling into homelessness.”

Interestingly, in light of the news of foreign buyers referred to earlier, the manifesto promises to pay for these affordable homes by bringing in a stamp duty surcharge on “non-UK resident buyers”.

Conclusion

Let’s hope the delivery lives up to the promises. If it does, we can expect a sense of energy and confidence to return to the housebuilding market after three years of limbo and uncertainty.

If you would like to discuss mezzanine finance for your development, please contact us now.

  • “I recently used Argyll Property Partners for mezzanine finance and found them highly flexible and good to deal with. They are very clued up about what is going on in the property market and gave me some valuable advice about the development. They have an existing relationship with my senior lender and this made things very easy. All the way through they did what they said they would do and delivered the funds quickly. I would recommend them.”
    Karen Seward
    Director, Modena Homes
  • “I think they are probably the best provider of mezzanine finance in the market. I am a client and a broker so I’ve dealt with them extensively with both hats on. Unlike some other lenders who do the same thing, Argyll fill you with confidence from the get go and offer support throughout the project. They are all very experienced, have a broad knowledge of the property market and respond to you quickly and professionally and with great efficiency. The relationship between them and my senior lender Close Brothers is seamless and always goes smoothly. I will use them again and will continue to recommended them to other developers.”
    Paul Smeeth
    Director, Charles James Developments Group
  • “I have used Argyll Property Partners for mezzanine funding on a number of developments and always find them highly professional and easy to deal with. I like the fact that they are so straightforward and make quick decisions. As they use their own money to lend they don’t need board approval and this makes the approval process very quick. I have no hesitation in recommending them for mezzanine funding.”
    Lee Clemson
    Director, Mantle Developments
  • “Argyll understood our requirements very rapidly and came up with an almost immediate offer, which was highly impressive. As a result of the strong connection they have with the senior lenders and their speed and professionalism (and that of their lawyers), the whole lending process was seamless. The best recommendation I can give is that we will use them again and I would recommend them to other developers."
    Richard Hayward
    Director, Richard Hayward Properties
  • “We found Argyll to be very quick and efficient. They gave their investment decision in short order and were easy to deal with. They understand the residential property market and had a good knowledge of the North Yorkshire market in which we operate. They were switched on to what we require – fast money and for the process to be simple when it comes to security packages and dealing with professional teams. Argyll were in fact introduced to us by our senior lender and they worked very well together as a team. We intend using Argyll again and have no hesitation in recommending them.”
    Nick Moody
    Newby