By Paul Broadhead, Head of Mortgage and Housing Policy at the BSA.

This article was first published in Mortgage Finance Gazette.

As Liz Truss is named prime minister, the new government must quickly get to grips and take action to support consumers with today’s challenges, including a number of priorities that impact housing. 

Support struggling homeowners without further delay

With household bills increasing at a rate higher than we have seen for more than 30 years, and price increases on food, fuel and energy being felt alongside rising interest rates and inflation, we all know that family finances are under growing pressure. It is therefore inevitable that some homeowners will experience financial difficulties, and action is needed now to better support them.

Lenders provide tailored support to those who are struggling, and whilst mortgage arrears rates remain relatively low, we’re far from sanguine about what the future may bring. Support for Mortgage Interest (SMI) helps homeowners who are struggling financially by paying the interest on their mortgage. Earlier in the summer, Government committed to reducing the waiting time for SMI to 13 weeks, from 39. The new Government must implement this change without any further delay – and why wouldn’t they when rough estimates show a household on SMI, under the new system, would cost the Government 10 times less than one on housing benefit!

Make housing a priority with a long-term strategy

At the heart of the housing challenge is a desperate need for a cross-departmental, multi-year housing strategy. This strategy needs to include plans for home ownership, social housing and the private rented sector and must be based on national and regional long-term demographic changes, employment, environmental concerns, infrastructure requirements and house price inflation.  Only by setting out long-term expectations and plans can all parts of the market work together to achieve real change. 

Much of the cause of the house price upward spiral links to the imbalance between housing supply and demand. Whilst not a new phenomenon, it remains a stubbornly persistent issue, particularly for young people trying to take a step on the housing ladder.

For many years we’ve advocated a need to increase the number of good quality homes being built across the country. We simply do not build enough as a nation to meet local demands and regional and national needs. I therefore urge the new Secretary of State for DLUHC to make house building a priority, and keep it there.

Commit to long-term plans for greener homes

Given our homes are responsible for 25% of the UK’s total energy usage and 16% of greenhouse gas emissions, a key priority is to ensure all new properties align with the Government’s 2050 Net Zero commitment. There is enough of a hill to climb with the need to retrofit 29 million existing homes without adding new-build properties into the mix. 

There are clearly challenges with retrofitting the existing housing stock: technologies change and evolve; consumers are uncertain about what steps to take, who to trust to carry out the work and how to afford the work. There’s also a mismatch between the upfront costs and the time taken to recoup them.  Ironically, as energy bills are sky rocketing there is growing consumer interest in reducing energy bills[1], even though for some this is sadly set against their decreasing ability to afford it.

Whilst industry has already done a substantial amount of work, we need Government to set out its long-term plans and expectations now, not in 2026. Only then can all parts of the market work together providing consumers with the confidence and tools to take much-needed action.

Update the Building Societies Act to reflect 21^st century

My final ask of the new Government is specific to building societies. For context, building societies hold assets of more than £481 billion, are helping over 3.6 million people to buy their own home with mortgages totalling over £357 billion, representing 23% of the total outstanding mortgage balances. 

They are also helping over 23 million people build their financial resilience, holding over £333 billion of retail savings, accounting for 18% of all cash savings.

Building societies have their own legislative framework, the Building Societies Act, which was last reviewed 25 years ago. Whilst the Treasury published proposals for changes to the Act at the end of 2021, there has been no further Government action.

We are pressing for the proposed amendments to be implemented as they’re required to ensure a level the playing field between building societies and banks, thereby ensuring competition and choice for consumers, and to future-proof our mutual businesses so they can respond to new emerging trends.

There’s always a long list of priorities for any Government, new or old, but as we are in the midst of a cost-of-living crisis and heading to the winter months, there’s no time for procrastination when it comes to housing policy.

[1] https://www.bsa.org.uk/information/publications/bsa-property-tracker