11:14 AM, 28th October 2010, About 12 years ago
Property investors are witnessing a shift in the housing market that will affect people’s attitudes to buying and renting homes for generations to come.
The truth is already out there – it just takes some thinking to join the dots.
Housing minister Grant Shapps has told the nation that Britain cannot afford another boom-and-bust house price explosion.
He certainly is not the first politician to mouth those platitudes in this or the last Labour government, but this time other moves are a foot to underpin his point of view.
Mr Shapps does not blame the buy to let investors for the festering underbelly of the market exposed by the credit crisis – the government blames the banks and building societies for their lending policies and rush for profits.
“Buy to let provides flexibility. There are people who want to buy into properties, but I also recognise there are people whose aspiration is to own homes,” he said.
“What is required is long-term stability in house prices. We can’t afford to have another boom, which will lock another generation out of the housing market.
“It is in everyone’s interest to have stable house prices for a long time, because the only way we can make sure housing is more affordable for future generations is not to have these crazy housing booms.”
Meanwhile, the Financial Services Authority is resolutely pushing on with plans to reform the mortgage market that could include loan-to-value limits, no more interest-only loans and tighter income and credit checks.
Another key move is the Homes and Communities Agency (HCA) one of the few government-funded agencies to survive the spending cull. The HCA is promoting joint ventures between institutional investors and house builders to kick start construction of private estates to rent.
Applying policy brakes to take the head of steam out of the housing market is the emerging strategy. By taking the drivers that push inflation away from speculators and lenders who are keen to stoke the fire for profits, the government hopes house prices will settle to a more even trend.
In the short term, this is great news for property investors who have already put their money in to bricks-and-mortar.
Providing enough homes for everyone will take a decade or more of negotiation, planning, and construction.
One study, by the University of York, claims 100,000 first time buyers are renting or living with parents as mortgage funds dwindled by 89% from providing loans to 245,000 first timers in 2006 to 26,000 in 2009.
A sustainable demand for private rented housing can and will continue because people still need homes.
And house prices? The smart money is on a sluggish market for the near future, with august groups like the International Monetary Federation (IMF) observing prices are still over-inflated.
However, what will happen when the Credit Crisis comes to an end. Will the pent up demand (e.g. families who are still in their two bed flat with two screaming kids), combined with availability of credit cause the ‘hype spike’ that Mr Schnaps is so desperately hoping to avoid?
Whatever you believe the outcome will be, you need a flexible plan. To help you write that plan we have a team of Portfolio Review Consultants. For further details please call our Customer Care Team on 01603 894525.