Sayid Javid – Smoke and Mirrors or Real Action for the Property Market?

Guest blog by James Morton, Director of High End London Estate Agent Benham & Reeves

Like many other Estate Agents this weekend, I listened to Communities Secretary Sayid Javid’s comments this weekend about the Government’s ‘plans to reform the housing market’.  It’s great to see the state of the housing market making the headlines, and I’m hoping that, this time, there are actually real plans behind the rhetoric.

Long term housing market issues & headline grabbing smokescreens

This Government has consistently failed to support buyers, sellers, landlords or tenants, and the failure to invest in social housing has created a long term problem that cannot be solved overnight.

Headline grabbing moves like proposals to ban estate agent fees and bringing in recent changes for property loans simply feed an incorrect perception that estate agents and landlords are all greedy and don’t care about tenants.  Legislation to ‘tackle the bad guys’ is simply designed to take the heat off the Government for failing to tackle the current housing crisis.

The gazumping legislation which grabbed yesterday’s headlines is merely another smokescreen to blame mythical rogue estate agents and grab headlines again. It is not a common practice these days, and the legislation will have little impact because it is no longer a widespread problem.

There are no quick fixes

Most estate agents are RICS qualified professionals, who charge a reasonable fee for providing a professional service, and the vast majority of landlords are ethical business owners who see property rentals as a two-way arrangement.  Of course, as a profession, we welcome legislation to protect against rogue practitioners, but rogue practitioners are not a massive problem, the housing crisis is the problem, and landlords and estate agents are providing the only viable alternative to social housing by way of private rentals.

The secretary’s announcement of plans to invest in social housing is extremely welcome and long overdue – more social housing is desperately needed.  However, promising to borrow to build is all well and good, but even with funding issues resolved, quality social housing cannot be built overnight.  Before we even consider the delays due to design and planning, where is the workforce coming from?

Desperate shortages in construction

The FMB’s latest State of Trade Survey for 2017 shows that 60% of construction SMEs are struggling to hire bricklayers; 58% are struggling to hire carpenters and joiners; and 45% are struggling to hire plumbers.  That’s even before Brexit starts to bite.

Brian Berry, Chief Executive of the FMB, told UK Contruction Online:

“We’ve been experiencing a severe shortage of bricklayers and carpenters for quite some time – these latest statistics show that skills shortages are now seeping into other key trades such as roofers and plumbers. Indeed, of the 15 key trades and occupations we monitor, 40% show skills shortages at their highest point since we started to feel the effects of the skills crisis in 2013 when the industry bounced back post-downturn. This growing skills deficit is driving up costs for small firms and simultaneously adding to the pressure being felt by soaring material prices linked to the weaker pound.”

Why discourage private rentals when there is no social housing?

Unfortunately, we are not in an economy where the Secretary can wave a magic wand and instantly manifest social housing.  In the meantime more needs to be done to support the private landlords who are taking up the slack.  This year has seen nothing but increasing legislation, higher costs and more restrictions being placed on landlords, who often borrow to fund property purchases.  Whilst it’s only right and proper that rented properties should be well maintained, we should be encouraging and supporting the private sector, both for rentals and purchases.

The measures property professionals are asking for

Sayid Javid has promised new ‘measures’ in the forthcoming budget.

I can only hope these measures are not more smoke and mirrors that try to shift the blame onto property professionals.

Industry professionals agree that urgent stamp duty reform and urgent Government help for first time buyers will get the property market moving again – and not at the expense of further costs for landlords.  I really hope those are measures we’ll see in the budget.

However,  if the new reforms are like any other Government trends we’ve seen in the housing market recently, I’m not holding my breath

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