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The general election and UK housing policy

May, 18th 2017

With Theresa May’s snap election announcement last month, we entered once again into a period of grand manifesto pledges, political machinations and fierce debate. But what might this mean for UK housing policy, and what are the implications for property investors?

Labour’s Jeremy Corbyn has pledged to build a million new homes over five years if he makes it to 10 Downing Street after the general election, in June.1 However, Sir Patrick McLoughlin, Conservative Party Chairman, accused Corbyn of making promises that could had not been costed realistically.

Demand for high quality housing
Demand for high quality housing in the rented sector is still far outstripping the supply: with the housing target of 240,000 new homes that the UK needs every year, being missed by 100,000.2 Home ownership is now at its lowest since 1985, at 62.9%, with one in five households in England living in private rented accommodation2. It is no surprise then, that the shortage of housing, and the pressure this is putting on borrowers, will be a key election issue. However, with party manifestos due to be officially published at some point next week, we are yet to see the full picture.

Looking to the private sector
Whereas in the past, the government took on the responsibility of building housing, it now seems that the current government looks to the private sector to fill the gap in the housing supply. By bringing in private investment to build new homes the government hopes to earn returns through dividends.3 Despite this, Labour has pointed their finger firmly at the Conservatives, accusing them of “seven years of housing failiure3.

Brexit brings uncertainty to the mortgage market
Despite Brexit and the uncertainty it has brought with it, there are still some major factors which have buoyed up mortgage market. Namely, the disparity between supply and demand, modest rises in inflation and the low Bank of England Base Rate.4  It is widely anticipated that the Bank of England will continue to maintain the base rate at 0.25%, in order to underpin economic growth.5 It would seem that despite some anxieties about inflation increasing too sharply, the Monetary Policy Committee is to a certain extent holding its breath and will not make any sudden changes. This comes not only as a result of Brexit, but also because of upcoming board member changes.5

Positive outlook for those looking to remortgage
With interest rates low, and ever more innovative mortgage products available from private banks, the outlook for those looking to remortgage is more positive than it may seem. Moreover, let's not forget that lending above a million is still much cheaper than it has been in a long time.
 

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We have unlimited access to the market, including a broad range of private banks and niche lenders. This means we may be able to arrange a mortgage for you, where others may be unable to help. If you would like to discuss your mortgage requirements with one of our highly experienced, specialist Mortgage Managers call us on 020 7519 4985 or send us an email.

 

 
 
 
 
  • This Month's Top Fixed Rate

    Fixed rate
    Initial rate: 1.24%

    Period: 2 Year

    Rate will revert to the lender's standard variable rate currently 3.74%
    The overall cost for comparison is 3.37%

    1.24%

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  • This Month's Top Variable Rate

    Variable rate
    Initial rate: 0.99%

    Period: 2 Years

    Rate will revert to the lender's standard variable rate currently 5.29% thereafter
    The overall cost for comparison is 4.64%

    0.99%

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Some of this month's top interest rates are listed above; the actual rate will depend on your circumstances. Please note that this information does not contain all the details you need to choose a mortgage, ask one of our advisers for a personalised key facts illustration on 020 7519 4900. The rate displayed may become out of date at short notice.

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A typical fee of 1.17% of the mortgage amount is payable. Of this, 20% is payable on application and the balance of 80% on completion. For example on a mortgage application of £300,000 the fee would be £3,510 in total. Of this, £702 (20%) would be payable on application and the balance of £2,808 (80%) on completion. The total fee is non refundable. We may also be paid commission from the lender. The guidance and/or advice contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK. Calls may be recorded for training and monitoring.
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