But how will the decisive election victory impact mortgages, homeownership ambitions for aspiring first-time buyers and those moving home? And what will it mean for our broken housing market?
Although, for a real understanding, we must wait until the Budget in February or March, experts have been offering their views on election pledges and promises made by Boris Johnson. Here’s an early indication of how the Tory Government might impact your mortgage and home.
Long-term mortgages for first-time buyers
Overall, the response to the Tory’s victory from experts in the property and mortgage world was positive, but there were concerns over whether the promises made in the manifesto and during campaigning would materialise.
One major pledge made by the Conservatives was to introduce a long-term fixed-rate mortgage for first-time buyers – a product which would be aimed at those with small deposits.
The aim was to help more renters buy their own homes by offering a route into homeownership to those who could only afford a small deposit of 5%.
It was a promise which came with mixed views from mortgage experts with some saying the idea of a ‘lifetime’ mortgage meant borrowers would be protected from future interest rate rises.
But others thought the pledge was too vague and called for flexibility in the design of these mortgages to allow for borrowers’ changing circumstances – for example, if they moved house.
Laura Suter, personal finance analyst at investment firm, AJ Bell, explained this was one of the biggest changes the Tories talked about bringing in for those struggling to get on the property ladder.
She added: “It’s not clear how these would be offered, with the party just saying they would encourage the mortgage industry to increase the availability of these products.
“A significant mental shift is required for Brits to sign up to these long-term mortgages, as even 10-year deals are rarely used in the UK – in part because of the often eye-watering exit penalties should you want to get out early.”
Help to Buy
In its manifesto, the Tories said they would extend the Help to Buy: Equity Loan scheme to 2023. This is an initiative which allows buyers to take out a loan from the Government of 20% of the property’s value (40% in London) on new build homes.
Keeping the scheme going for another three years will help lots more buyers, but many mortgage industry insiders were concerned about what would happen once the scheme ends in 2023 – an areas of the manifesto which was also unclear.
But, Richard Hayes, CEO and co-founder of digital broker, Mojo Mortgages, said if the promise on extended Help to Buy were kept, it would be welcome news to first-time buyers.
“Help to Buy was extremely successful and extending it further will open up a reliable path to home ownership for first-time buyers in all parts of the United Kingdom,” he said.
He also said plans to bring in a ‘better deal for renters’ which included abolishing ‘no fault’ evictions and introducing a lifetime deposit which moves with the tenant, rather than having to put down a new deposit for each property a tenant moves to, were also positive.
But, he added: “Again, if this promise is kept, it will be good news for renters who undoubtably want to purchase their own home.”
Solving the housing crisis
There have been 18 housing ministers in 20 years, which prompted Jackie Bennett, director of mortgages at UK Finance, to call for a minister in this department with a long-term vision, who could allow proper decisions to be taken on some of the big issues.
It was something which was echoed by many experts with Martijn van der Heijden, chief strategy officer at online mortgage broker, Habito pointing out, whoever takes on the role will have ‘fundamental challenges’ to grapple with. These included a lack of affordability, the effects of a stagnating market and a lack of innovation in both mortgage products and the house-buying process.
What’s more, he said finding time amid the busy Brexit schedule to tackle the problem of affordable housing could also prove challenging.
Mostly, the industry wanted the Tories to fix the UK’s broken housing market.
Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA) said: “This doesn’t just mean building thousands more of the new homes the country needs.”
Davies called for the Government to recognise the importance of the private rented sector and to adopt a long-term strategy with cross-party, cross-departmental co-operation to ensure there’s a sustainable supply for housing supply and buyers and renters were properly informed and protected.
She said, even with a Conservative majority the challenges facing Britain’s housing market won’t be tackled by a quick fix.
Stamp duty
There was very little in the Tory’s manifesto about stamp duty changes, aside from the introduction of a surcharge on non-UK resident buyers.
Research by estate agents, Jackson-Stops, found 41% of people thought there should be a wholesale reduction in stamp duty across all price brackets and over a quarter thought it should be abolished on homes under £500,000.
Nick Leeming, chairman at Jackson-Stops, said: “It was therefore disappointing to see the party’s manifesto only focussed on increasing the amount of stamp duty payable for non-UK residents – done in an attempt to take the heat out of the property market.
“If we are to give the economy the much-needed boost it needs, what we actually need is to reduce the burden of stamp duty across the wider UK housing market.”
