How Theresa May Might Affect the Housing Market
As the new Prime Minister, Theresa May has to bear the brunt of a potential housing crisis that is threatening the UK in coming years. Even now, average earners are struggling to purchase their own homes and instead are forced to rely on inflated rental properties.
Some polls show that around a third of Brits don’t believe they’ll buy a property in the current climate, whilst most could only do so with family help. This means more people rent, which of course takes up a lot of their income, or are forced to take out risky mortgages that stretch them financially.
This means that demand is high for rental properties right now, which is great news for those who have already invested in property, and it doesn’t look like that demand will be decreasing any time soon. But the future may also hold some good news for those currently struggling to buy their first home.
Luckily for those looking to take a step onto the property ladder, Theresa May has been a strong advocate for new building schemes throughout her political career. Even before being announced as PM, she addressed the problem specifically:
“Unless we deal with the housing deficit, we will see house prices keep on rising. Young people will find it even harder to afford their own home. The divide between those who inherit wealth and those who don’t will become more pronounced. And more and more of the country’s money will go into expensive housing instead of more productive investments”.
Without her own personal mandate to lead the country, it’s expected she will still try and honour the promises made in the Conservative manifesto from the 2015 General Election. They include the building of 200,000 new Starter Homes for first-time buyers at a 20% reduced rate, along with extending the Right to Buy scheme where eligible council and housing association tenants can purchase their home with a substantial discount.
As Prime Minister, May made an inaugural speech highlighting the need for a fairer society which serves ‘the many rather than the privileged few’. One recognisable way she can do this is to address the consequences of an unstable housing market, especially during the immediate post-Brexit aftermath.
With her reference for the “need to do far more to get more houses built”, the Prime Minister will be looking to push the 156,000 new homes registered in 2015 closer to the 250,000 figure required to ease pressure.
One solution that Theresa May and her new government don’t appear keen on is building new homes on the contentious green belt, especially in the south of the country. Sajid Javid has quashed rumours of doing so, saying “the sacrosanct Green Belt remains special”.
However, some critics of this approach point out that declassifying a very small percentage of green belt can see hundreds of thousands more houses built at minimal environmental cost. This is one option May should consider if the housing issue becomes a more serious concern in the public eye.
There’s also a call to obtain all surplus public sector land owned by local authorities such as the NHS. This could allow the construction of over 100,000 new homes in London alone.
It would be quite controversial to go against the policies of the former Chancellor George Osborne, but one option could be to scrap the demand-side subsidies for prospective first-time buyers that have angered some landlords and investors in the buy-to-let sector.
This alone shows how difficult it is to please everyone who has an interest in the housing sector, along with green belt policy, whilst also satisfying the huge demand for new homes. Only time can tell how Theresa May will attempt to solve these problems as her premiership unfolds.
For more information the housing crisis, check out why so many millennials are choosing to rent.