What Does Retention of Minister for Housing Brandon Lewis Mean for UK Housing Policy?

by Bradley Weiss Lucent Group

The May 2015 election now past, housing policies will likely be kept intact. Given recent progress, that should cheer investors as well as homebuyers.

It’s not at all surprising that discussion about the housing shortage in the UK would turn into a political question during a national election year. And in fact the ideas were flying between Conservatives and Labour in the months leading up to David Cameron's resounding victory in May.

At issue were his various schemes, including Help to Buy, a Help to Buy ISA and various iterations of Right to Buy with social housing. Labour proposed that banks and building societies that participated in the ISA be forced to invest deposits in new housing, which drew criticisms from the right for skewing investments away from free market mechanisms. “Either a housing scheme that a property developer or housing association is seeking finance for is reckoned to be profitable – or it isn’t,” wrote a columnist on ConservativeHome.com.

The columnist further stressed his interests in liberalising the planning system in order to free up supply. Which is precisely what property fund partners, seeking a return on assets, do as a matter of course.

Despite England’s history with social housing, reaching back into the early 20^th century, UK land investment forces were the driver of most building throughout the UK. With property funds, individual investors are tapped to buy land and develop it into homes and commercial property. The simple market forces of supply and demand produce housing as needed.

Which is part of why the retention of Brandon Lewis as minister for housing drew mostly praise following the election. The programmes that were instituted prior to May 2015 have begun to show promise, cheering those with real asset funds dedicated to purchasing land for development into housing.

PropertyWire.com, a global property news service, reported one month after the election that Lewis’ first term turned up encouraging results:

60,000 affordable homes were delivered in the 12 months prior to the election, up 63 per cent over the prior 12 months (6/2013-5/2014).
This number makes 260,000 affordable homes built since April 2010, exceeding goals by 16,000 homes.
The Government has pledged £38 billion in public and private financing, real assets that fund community building and home building to support Britain’s growing population.
While London alone received a third of those new affordable homes, substantial numbers were also built in Cornwall, Birmingham, Wiltshire, Leeds, Liverpool and Manchester.

As for the ISAs, Lewis predicts the individual savings scheme “will support over a million first-time buyers to achieve their dream of owning their own home.” Clearly, he remains fixed on the programme actualising in late 2015.

Those who invest in property funds already are pushing much-needed inventory onto the market, which readily purchases the homes once built. But due to the overwhelming growth in population and a strong, upward climb in the economy, affordability for younger people has largely been the issue. But with the continued success of Help to Buy, the Affordable Homes Programme, and the promises of the proposed Starter Home Initiative (houses for first-time buyers, built on brownfield land and minus Section 106 levies), younger workers are starting to see opportunity.

So with the continuity of programmes from Minister Lewis, application of real assets by private investors can have a synergistic effect of increased housing stock in the country. Time will tell, of course.

Individuals who invest in land can do so with a sense of duty to country, if they so choose. But all investments need to be considered objectively, which is best done with the counsel of an independent financial advisor.