Date Published 02 October 2017
You have heard the term, it has been quite a week in politics, well put another way it will have been quite a week in our housing market if recent government, opposition and Bank of England announcements transpire into fruition.
Last Wednesday Jeremy Corbyn the Labour leader at their party conference re-iterated that his party was becoming the new centre ground with his views that were often seen as on the fringe now becoming fundamental vote winners especially with the younger generations - those affected most by the capitalist model that is showing signs of cracking at the sides. I must admit that in the past I have seen Labour as ‘quasi' Conservative. Though not now. Within his speech he was passionate in the needs for ‘No social cleansing, no jacking up rents'. The recent Glenfell Tower fire had highlighted a monument to a failed economic and housing system in the UK as he set out Labour plans for city-wide rent controls and a crackdown on gentrification projects – to quote the neoliberal economic model 'forged by Margaret Thatcher many years ago' is broken.
Corbyn's plan is for more state intervention in housing. 'Rent controls exist in many cities across the world and I want our cities to have those powers too and tenants to have those protections,' Corbyn said. This would include limiting rent rises to inflation. Corbyn said: 'We also need to tax undeveloped land held by developers and have the power to compulsorily purchase. Families need homes. No social cleansing. No jacking up rents. No exorbitant ground rents'. Corbyn's vision was not about dismantling capitalism, but about rebalancing the economy with more state involvement. I would agree with him as we within the house selling profession experience firsthand the difficulties met by the young and even now the not so young generation still seeking after a decade or two to get onto the property ladder. While renters aspire to enjoy / save their earning captivity and not work to just pay the rent and bills.
Last Friday Mark Carney the governor of the Bank of England hinted that interest rates which are at an all-time historic low would, if the economy keeps on its current track in the relatively near term, need to increase to easy off the ‘accelerator'. Inflation is starting to rise, due to a fall in the value of sterling, as a result of Brexit and the desire is to revert back to the 2% target. Borrowers have not had it so good as rates have remained low for almost a decade at the expense of savers. Though it is getting that ‘balance' as rate rises can cause the economy to slow too much resulting in depression as ones deposable income is reduced and we all tighten our belts. Perhaps the honeymoon period is over?
Finally, last Sunday Teresa May our Prime Minister confirmed on the Andrew Marr show that the Government was funding £10bn into the Help to Buy scheme. This works by enabling first time buyers to provide as little as a 5% deposit with a Government loan and will assist some 135,000 buyers. However, the funding only applies to newly built houses/flats. This only assists developers selling what some consider overpriced new builds. It does not pass onto the bulk of properties which are sold ‘second' hand. The scheme really needs to be expanded to include all housing types, as that would make a real difference. After all chain sales can extend to several sales within one transaction. First time buyers buying what is a chain free new build does nothing for the pre-owned market.
To conclude, Labour have ruffled Tories feathers, the economy in terms of unemployment remains low, though uncertainly is starting to creep in. The younger generation needs change. Politics being politics doesn't necessarily provide the correct outcome when you are trying to steer the ship and your compass is not pointing in the right direction…