UK Government News: Expectations Of The UK's Housing Sector

As anticipated, the cost of living crisis continues to be on the UK's top agenda, and the Springs Budget is no exception to this. Most people were not expecting any exciting announcements, but the Private Rental Sector had a few reasonable hopes from the spring budget. Incentives are essential to attract investment and bring stability to the sector. Investors and other stakeholders in the private rental sector were looking forward to a significant boost in the form of additional support for the housing market.

Key problem areas

Key problem areas

UK's private housing sector is struggling with the problem of rising demand and the dwindling supply of rental homes. Rising rents are the immediate fallout of the shortage of rental homes across major parts of the UK. Affordability problems continue to prohibit the would-be homeowners from buying new homes and forcing them to live in rental accommodation further exaggerating the problem. Many landlords are leaving the private rental market, as some figures show that over 70,000 landlords left the private rental sector during the last twelve months. This exodus has created a shortfall of 116,000 properties, worsening the outlook for the private rental sector. Anti-development policies are causing extreme hardships for the housing industry at a time when the business environment is highly challenging because of rising inflation and economic uncertainty. The UK must bridge the gap by encouraging the private housing sector with more incentives and fewer regulations.

Need to facilitate the building of new homes

Need to facilitate the building of new homes

Easing regulations can help boost the housing market as the UK requires more new homes. Allowing more tax incentives to produce new homes would encourage housebuilders and property investors. A capacity increase is crucial to stabilize house prices and curtail the pace of rental growth, the former is essential to help first-time home buyers. The housing market needs social housing support to function effectively. Yet most Registered Providers seem to build for market sale or market rent allegedly to fund their social purpose or are effectively out of the market as they begin to get to grips with the greening agenda for older stock. The expectations of the housing industry from the Conservative party are in line with the party's image of being the party of home ownership. Tax reliefs and other direct reliefs, such as IHT and stamp duty, will make the housing market more vibrant shortly.

Encouraging first-time buyers

Encouraging first-time buyers

Improvements are necessary to boost homeownership as are they to help increase the availability of rental homes. More first-time buyers mean fewer renewals of rental contracts. Therefore creating better availability of rental properties to soften rents. There is a need to optimize the use of available housing by increasing penalties for keeping buildings or land vacant. Ending the freeze on housing benefits will ensure relief to private renters who are struggling with the prospect of homelessness. The government should re-examine its policy of discouraging private sector investments that caused the shortage of rental homes, yet we doubt a U-turn on mortgage tax relief is likely.

Missed opportunity

Missed opportunity

Chancellor Hunt presented the Spring Budget with an unexpected and disheartening deviation from the conservative party's pledge of building 300,000 homes, every year. His address omitted the housing sector, missing the golden opportunity to improve the party's prospects in the next election. The budget did not provide any respite to the housing market as it missed the much-anticipated announcements on the supply of affordable and quality homes. There was no mention of the party's manifesto of improving the supply of homes. Homeownership and home building were the main highlights of the 2018 and 2019 budgets, but have been omitted in 2023.

Chancellor Hunt failed to deal with the cost of accommodation while addressing energy bills and childcare costs. The housing sector is a vital contributor to the overall economy and Mr. Hunt missed a valuable opportunity by neglecting the sector. The only ray of hope for the housing market is the positive inflation outlook. It will help reduce interest rates, helping borrowers get better mortgage pricing.

How Ringley can help

How Ringley can help

Ringley supports both investors and housebuilders throughout the UK, we are active in the Build to Rent sector and advise both new entrants and those looking to scale. As an operating partner, we provide