Industry professionals give their appraisal
It’s often said that a week is a long time in politics – 12 months, then, must have felt like a lifetime for Sir Keir Starmer, who is marking a year in 10 Downing Street. It has, by any standards, been a difficult period for the Labour leader as he has tried to establish himself as Prime Minister, leading a new government after 14 years of Tory rule.
Given the stormy final months - and indeed years - of the Conservatives’ time in office, there was an expectation among some, perhaps many, that ‘it couldn’t be any worse’. Yet, few could doubt Starmer’s administration has suffered a faltering start to its Parliament.
There was the controversy of appointing as his chief of staff, Sue Gray – the woman who led the Partygate investigation into Boris Johnson. She didn’t last long. There was the even bigger controversy over cutting winter fuel payments and the government’s welfare reforms. The Prime Minister and his Chancellor Rachel Reeves were both caught up in ‘freebiegate’, with questions raised about their integrity after accepting gifts of clothing, concert tickets and even spectacles. This was followed by a series of damaging U-turns, so early into Starmer’s premiership. And, all the while, Labour’s popularity has plummeted in the opinion polls.
On the plus side, Reeves announced £39 bn for social and affordable housing in last month’s Spending Review, which was welcomed by professionals in the mortgage industry. An additional £10bn for financial investments was pledged, to be delivered through Homes England, for crowd and private investments, to unlock hundreds of thousands more homes – and also well received.
So how does the mortgage sector view the first year of the Starmer government?
Broker Tim Spencer (pictured left) manager director of Optimus Mortgages, commented: “Considering the absolute shambles that was left by the previous government, I feel that Keir Starmer has spent the past year trying to wrestle with the economy with one hand tied behind his back. There have been a few announcements in relation to mortgages, legislation and the property industry in general that sound promising, but when you scratch under the surface, they need more thought.
“In the Autumn Budget, the Chancellor reiterated Labour’s manifesto promise to build 1.5 mn homes over the course of this Parliament and committed £5bn of investment to deliver plans on housing next year. As part of this investment, there will be a £500mn boost to the Affordable Homes Programme to build up to 5,000 extra homes.”
Spencer continued: “I feel that everyone should have the right to own their own home, however not everyone is in a position to be able to do that. There is definitely a place for affordable housing, and rental properties as everyone’s needs and circumstances are different, but far more funds should be put into old school council housing. People want to feel safe and secure in their home, and not live under the cloud of a landlord suddenly upping their rent, or trying to sell the house from under them.”
Serena Smith (pictured second from left), adviser at Mortgages with Serena, is optimistic - mostly. “It's early days - only being 12 months in,” Smith said. “The tone feels more hopeful and there’s talk of change, but we’ve heard promises before. I’m looking for action, not headlines. Let’s see if they follow through.”
What, then, would Smith like the Government to do, going forward, particularly around housing and financial services? “Housing needs to be treated as a real priority, not a political slogan,” Smith said. “We need more affordable homes, proper support for first-time buyers, and tighter regulation of bad landlords. On financial services, the focus should be on stability and access. Stop moving the goalposts. Make things clearer and easier to navigate, especially for people who are doing all the right things but still feel stuck.”
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Building a future
Peter Dockar, (pictured second from right), chief commercial officer at lender Gen H, commented: “I think we can summarise the best thing about the Labour government performance in one awful phrase, ‘Build, baby, build!’. Seriously, that is the one thing Labour have indisputably nailed as a priority. Focus on housing supply addresses one of the great inequalities in our society. If they succeed, the OBR have said it’s one of the few things Labour are actually doing to grow the economy, so we will all win.”
He continued: “Given the importance of financial services to the UK economy - and to the UK’s soft power more broadly - the action they’re taking to encourage innovation and improve regulation is likely to have a far wider beneficial impact on society and the economy. Yes, there are things they could be doing better, but I’m feeling optimistic - all about the execution now!”
Kim Balasubramaniam (pictured right), co-founder and director of brokerage, Versed, suggests that looking at the Government’s first 12 months from a neutral standpoint, it’s been a year largely focused on stabilisation and setting out the tone for long-term reform. “There’s been an effort to restore public and investor confidence, and to create a more measured approach to policy delivery,” she noted. “For us, as advisers, and for the clients we work with, predictability and consistency are vital. While it’s still early days in terms of major legislative change, there’s an expectation now for delivery particularly around housing, taxation, and long-term savings. We’re looking ahead with cautious optimism and a hope that the next phase brings more clarity and impactful reform across these areas.”
Luther Yeates (pictured inset), head of mortgages at Orton Financial, seems less impressed. “I would struggle to pick out any positive achievements over the past year,” Yeates said. “I wouldn’t say we see the honesty about the trajectory of the economy, and how this can be addressed. If people don’t agree with a decision, but don’t understand why it is being taken, they will always face a backlash. We are currently in a position where tax rises are imminent, and it remains unknown who the burden will fall on.”
He continued: “The change to the nom-dom tax status has hollowed out the market in London, as this has coincided with a fall in international students, who typically could afford the higher rents, or more expensive properties. We have seen property valuations returned below purchase price, where properties were purchased as far back as 2017. I have also started to see valuations returned lower on purchases, which is a concerning indicator.
“The changes to Stamp Duty have also stemmed demand for the typical transaction, which is also having a negative impact on the housing market. If the current trend continues, we may reach a point where the housing market collapses altogether. Lenders will tighten up their lending, and we risk dragging the wider economy into a recession.”
What would be on Yeates’ wish list for the Government in its remaining time in office? “The Government needs to firstly review if the inflation target for the Bank of England is fit for purpose,” he said. “There are different schools of thought, that perhaps a target which is more dynamic is better suited. If the Bank had flexibility of 1% in either direction around the target, it would allow them greater flexibility. If the government wanted to make one change which would likely increase their tax receipts and still benefit the wider economy, it would be a different Stamp Duty structure for under-occupied properties, where downsizing is taking place.
“If you have one person living in a larger home and they want to relocate, the Stamp Duty is going to provide a negative incentive to move. If there was an exemption or reduction which applied, we might unlock this ‘lost’ housing stock. If we were able to free-up more of these family homes, it would bring more starter-homes back to market, which ironically then suit either the downsizer or first-time buyer - providing a complete solution.”
Meanwhile, Paresh Raja (pictured inset), CEO of Market Financial Solutions, summed up: “Stop-start would probably be the best way to summarise Labour’s first year in power. The past 12 months have been defined by a huge amount of geopolitical turbulence, which has largely been out of the control of Keir Starmer and his party - Trump’s return to the White House and all the chaos that has brought with it, coupled with conflict in Eastern Europe and the Middle East, have created a very difficult backdrop for Labour to implement its domestic policies, and it feels like progress has been limited. Positively, the economic landscape has improved slightly. Inflation, while sticky, has remained below 3% for much of the past year. The base rate, meanwhile, has dropped from 5.25% to 4.25% since Labour came to power. But this isn’t enough to mask the issues surrounding the Government.”
Raja added: “After 14 years of Tory rule, it was always going to take time for Labour to bring about the changes it campaigned for, but patience will run out, and this second year is going to be very important. After years of economic hardship and turmoil stemming from the pandemic, the UK economy needs to turn a corner, and critical issues, ranging from housebuilding to GDP growth, must be addressed in the next 12 months. The results might take years to shine through, but the challenge right now is for Labour to show that its policies and fiscal commitments are tackling the problems that matter.
“The Spending Review underlined that it is intent on delivering on its promise to ‘get Britain building’, and planning reforms will likely be key in supporting the £39 billion investment Labour is making. As a major social issue, boosting the country’s housing stock ought to be a priority over the remaining four years of this parliament. Improving the supply of housing, along with the savvy marshalling of the economy to help bring the base rate down and alleviate the cost of borrowing, would provide a huge shot in the arm for the property market, which in turn can boost the performance of the wider economy. With a tricky first year out of the way, it’s time to see Labour make larger strides in achieving these things.”
