Whilst the public usually ready themselves for the annual festive speech delivered by the Queen on Christmas Day, parliamentary difficulties meant that the public were treated to two preludes as the Queen was forced to introduce the intentions of her newly formed government.
During the December speech, the Queen referenced improved protections for tenants, steps to support home ownership, leasehold reforms and the target of building 1 million residential homes by the end of 2024.
Whilst the general election has had a positive impact on the sector, property stakeholders are currently scrambling to come back from significant market decline in the final stages of the year.
The property sector certainly went through the ringer in 2019 with multiple Brexit delays culminating in reduced consumer confidence in property and a hesitancy to sell in such a volatile market.
Office for National Statistics data suggested that house price growth has fallen by 7% since the referendum in 2016 and 1% year on year by October, signalling a clear flattening in the market.
Similarly, housing stock entering the market finished the year at a decade low with just 41 properties registered with each estate agency, according to NAEA Propertymark data.
With fewer sellers, reduced housing stock and construction suffering from considerable contraction last year, will the government successfully deliver on their property promises published in the manifesto and through the Queen’s penultimate Speech of the decade?
One Million New Homes By 2024
The government had aimed to build 300,000 new homes per year by 2025. However, revised estimations made through the manifestos mean that targets are now set at 200,000 new homes per year whilst the current government remains in charge.
In October the construction sector entered the longest period of decline since 2013 with all work contracting by 2.3% and new work falling by 3.6%.
However, November’s figures indicated imminent sector improvements. The 1.9% increase represented the largest single rise in output since January 2019.
As output started to improve and the political landscape became less opaque, sector sentiment also started to improve. Almost half (43%) of the key stakeholders in UK construction now feel as though their business will grow in 2020.
Now that the tide is turning, confidence increases and the sector begins to resume healthy levels of new work, the government can feel more optimistic of achieving their target by the end of their current tenure.
Supporting Home Ownership
Through the First Home initiative, the government aim to make home ownership more affordable by offering local first-time buyers the opportunity to purchase at a discounted rate.
The initiative will ensure the homes will remain discounted in perpetuity to help future buyers. The government later suggested councils will be able to use developer contributions to discount homes by 30% for local buyers.
However, the success of this scheme will be dependent on a number of variables including the success of the construction sector.
However, between November 2018 and 2019, private residential new work fell by 6.1% and despite an overall rise in November, new work for private residential developers fell by 2.6% between October and November.
If construction fails to increase at the rates the government would like, they may struggle to fund these schemes if they heavily rely on the contributions of developers.
First-time buyers were integral to the property market in 2019, making up over 50% of all transactions. Help to Buy equity loans were also used to fund 4.3% of all housing transactions recorded in the opening half of 2019.
Whilst the initiatives outlined in the Queen’s Speech will help a lot of buyers who may have been unable to purchase a home under normal market conditions, the government will need to clarify their position on Help to Buy and their intentions for when the scheme ends in 2023.
The latter part of the last decade reported the plight of leaseholders trapped in onerous conditions which made it difficult to sell on their homes.
During the summer, the government put legislation in place ending the use of leasehold property in all new build houses, except in extreme circumstances and onerous ground rent was capped at a peppercorn fee.
Some leasehold activists thought these issues did not go far enough in helping existing leaseholders.
The latest speech clarified the government’s position in ‘taking forward a comprehensive programme of reform to end unfair practices in the leasehold market.’
This has materialised in the form of Law Commission recommendations in making the enfranchisement process of buying the freehold title or extending the lease a lot easier.
The recommendations attempted to strike a fair balance between the human rights of both leaseholder and freeholder. The options ranged from abolishing the ‘marriage value’ imposed on leases that dip below 80 years through to options which retain current law.
Whichever direction the government takes, it seems as though a holistic consensus is very unlikely to be reached. Landlords will always oppose reforms reducing premiums and leaseholders will always be concerned that any option will not go far enough.
Whilst the government may face delays to their manifesto plans as the UK property market recovers from increased uncertainty, there is no need for property searches to face similar delays.
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