General Election: People want to see housing problems prioritised

By Mark Graham, Chief Executive of Co-Ownership

General Elections are strange things in Northern Ireland. We don’t vote for anyone that is going to form the next government in the rest of the UK, and many of the policy debates about the NHS, climate change, education and housing can feel a bit irrelevant. How we run our own public services is largely a matter for the Northern Ireland government – but decisions made in the House of Commons will matter here.

Housing is a good example. All parts of the UK suffer to a greater or lesser degree the same housing challenges. We’re not building enough homes, especially not social homes. The private rented sector is increasingly unaffordable, of mixed quality, and doesn’t provide the security that people, especially families, crave. Young people, particularly those without funding from their families, find it difficult to afford and access home ownership. Each devolved administration in the UK has developed their own housing policies, with a stronger focus on home ownership in England than elsewhere.

Tax and spending decisions of the new government will matter most of all. This year we will see a catastrophic fall in the number of new social homes being built here. The total number of starts is unlikely to be more than 400. This compares with an average in the last five years of 1688. To address the current levels of housing stress will require 6,450 starts over the next three years, according to the Housing Executive’s commissioning prospectus. This will have awful consequences for those who are homeless or living in unsuitable homes. It will also have consequences for the construction sector and the economy – every pound of public funding is supplemented by the nearly the same amount of private funding.

People make the case in Northern Ireland that we don’t receive our fair share of the pie from the UK government, that we don’t use the funding we receive efficiently, and that we raise insufficient money ourselves. This is all true – but fundamentally the problem is that the UK investment pie isn’t big enough, and our local government has difficult choices to make.

On a more positive note, a recent report from the Institute of Public Policy Research (IPPR) proposes that a new Labour government could increase investment to a level not seen since Ted Heath’s government of 1970-74. That said, it also points out that a Labour government would end its first term having cut investment to enable it to live within the so-called fiscal rules. Inadequate public funding is likely to continue.

Co-Ownership operates in the private housing market, and this will be influenced by potential reforms to a variety of fiscal, monetary and regulatory policies – all of which are controlled by the UK government.

Stamp Duty for example is widely recognised as a tax that reduces housing transactions and disincentives older people to move to a smaller home. It is easier said than done to get rid of it – it collects £12 billon per annum – but as we’ve seen in the Conservative manifesto, it may be tempting to tweak it to benefit first-time-buyers, but the benefits often go as much to the seller as to the buyer as stamp duty holidays often inflate house prices.

Following the Global Financial Crisis, regulators tightened mortgage lending criteria to both protect bank balance sheets and the consumer. Most notably through the Mortgage Market Review (MMR) in 2014 which required stricter affordability assessments and the effective end of zero deposit mortgages. This made bank lending safer, but also more difficult for first-time buyers to get mortgages. Various think tanks have proposed it might be time to look at whether regulations could be loosened. The Labour Party has proposed to make the mortgage guarantee scheme permanent – essentially allowing government to act as a guarantor for part of a home loan, reducing the risk of low-deposit mortgages.

The big one is of course mortgage rates. No one expects interest rates to fall back to what they were in 2022, but a stable low inflation economy is essential to provide the confidence to lenders and consumers to get the housing market moving again.

So, lots to look out for as a new government sets out its priorities and spending plans. In the spirit of “it can only get better” let’s hope the new government recognises the need for long-term investment in housing, and that having a home is the foundation for people’s wellbeing as well as a critical part of a physical infrastructure that will help our economy prosper.