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Post Brexit & UK housing

A million homes by 2020 to deal with Britain's housing crisis - that was the government commitment made just last month in the Queen's Speech. But what chance now?

Department for Communities and Local Government (DCLG) ministers say it is business as usual - but it plainly isn't.

The controversial Housing and Planning Act, which gained Royal Assent just a few weeks ago, still needs both Houses of Parliament to give "affirmative approval" to rules on the sale of high-value council properties to fund right to buy.

Parliamentary and ministerial time is going to be at an absolute premium as departments try to deal with the massive fallout from Brexit.

And even if the DCLG pushes ahead with the policy, some are asking what's the point?

We know we are going to get a new prime minister within a few months, one who will have rather more pressing priorities than regulations on the definition of high-value homes.

There may be a general election this year or early next, in which case all bets are off.

And much of the act - starter homes and right to buy for instance - is predicated on a belief that private builders will build and bankers will lend.

With shares in house-builders having fallen off a cliff since the result of the referendum, and banks likely to pull in their horns during the enormous uncertainty of a post-Brexit Britain, the housing crisis just became a whole lot more critical.

It was only three months ago, when the UK's largest property developers accused of 'profiting' on the back of the housing crisis 

Secretary of State at DCLG Greg Clark and Housing Minister Brandon Lewis are meeting housebuilders this coming Thursday, when, they will be talking about "achieving shared ambitions and assuring the sector that the government is committed to existing housing commitments".

The department says: "Ministers will be keen to hear the views of those attending, as well as their questions and ideas." It is likely to be a lively affair.

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The chancellor warned house prices would fall at least 10% in the event of a Brexit vote, a warning that may actually have been an encouragement to vote Leave for some of those priced out of the housing market. However, that silver lining may have been a mirage.

Housing ladder

It's still very early days, but if the supply of new homes stalls, as most expect, and if banks also become more cautious in their lending on mortgages, then the chances of getting on the housing ladder will diminish for millions.

The fundamentals underneath the government's ambition of one million new homes by 2020 are broken.

Many thought the commitment was hopelessly ambitious even before Brexit.

Now, very few in the sector imagine they will get even close.

House prices are expected to fall in the wake of the Brexit vote

Given the new environment we are all living in, people are beginning to talk about some kind of emergency response to the housing crisis.

If the private sector won't build the houses Britain so desperately needs, then what about the state?

The European Investment Bank has confirmed that a £1bn loan for social housing in the UK agreed in April will still go ahead despite the vote.This is also news..

But it is only a drop in the ocean, and that source of cheap finance may soon disappear.

Although Interest Rates have been at 0.5% since 2009 as Britain has struggled to recover from the 2008 financial crisis.

UBS also expects the vote to put off rate rises in the US.

Economists had thought Janet Yellen, governor of US central bank the Federal Reserve, would put rates up in September - something UBS now thinks won't happen.

David Tinsley, UK economist at UBS, said Brexit meant "sharply lower growth, a large drop in the pound, and further easing from the Bank of England".

Tinsley expects UK growth rates to fall to zero in the second half of the year, the economy had been growing by about 2%, and in the long term there could be even greater damage.

Much depended on future trade negotiations, and what type of access the UK had to the European single market.

"In our view [Brexit] could lower long-run UK GDP by about 3.0% under a scenario in which access is very restricted," he said.

Housing market experts expect the pace of house price growth to slow down and fewer sales to take place as potential buyers and sellers sit it out while the dust settles.

London, which has attracted strong interest from foreign property investors in recent years, is predicted to see a particularly strong impact.

But it has been suggested that the weaker pound could also encourage some foreign property investors to snap up homes in the capital while they appear relatively cheap. In the longer term though, a shortage of properties on the market is expected to support house prices.

This Year Ortega [pictured], briefly passed Microsoft founder Bill Gates to become the world’s richest man with an estimated wealth of nearly $80 billion (£53 billion).  

Ironically Amancio Ortega [above] one of the world's richest men in europe with a fortune of close to $80 billion. A fortune founded on retailing and fashion via Indetix ; founding high street brands Zara and Massimo Dutti to name a few. Post Brexit, Inditex has lost 10 % in shares , Though Oretega has also invested 
over a billion in sterling on his London Real estate portfolio .Notoriously secretive, Ortega does not discuss his property empire.

Earlier this year the retail mogul, snapped up a £400 million stretch on Oxford Street, including retail space, adding to a number of offices it owns such as Devonshire House opposite The Ritz.

Most recently the purchase Almack House for over £225 million, in the West End of the UK capital.

London is also top of the £6bn Iranian investment wish list with the advent of sanctions being lifted earlier this year.

China is investing Big in UK property / Real Estate North & South > all you need to know

However In trying to mitigate the disappointment and anger that the economics of Brexit could mean for many younger and poorer people in Britain, in the short to medium term at least, a commitment on making housing more affordable could be very important.
Number of permanent dwellings started
YearEnglandWalesScotlandNorthern IrelandUnited Kingdom

SOURCE government accounts 

If rents continue to climb faster than incomes (and it looks very likely they will in much of the country), and if the opportunity to buy is reduced by lack of finance and supply, then senior figures in the housing sector are arguing it makes sense to look at some sort of emergency house-building programme underpinned by the Treasury.

Councils could have their borrowing rules loosened, allowing them to get capital for sub-market price homes.

Housing Associations could be promised extra grants.

And central government could even start building houses directly - as the previous coalition began to do in a very small way at Northstowe in Cambridgeshire.

It is not business as usual.

It is it not even just a bit different.

The economic and political rule-books have been torn up.

There is an opportunity for the kind of radical thinking that many in housing have been demanding for many years.