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A new political era

publication date: Jun 6, 2010
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10 Downing streetThe negotiations to form the historic coalition between the Conservative Party and The Liberal Democrat Party were unprecedented and broad ranging. Within a very limited time frame the two parties had to resolve differences on may issues so it is hardly surprising that there was little specific news of housing issues and policies.

More policies and compromises – presumably not all of them popular – will be revealed over the coming months but most property professionals have welcomed the coalition government and expressed relief that the election buildup is finally over and we can, we hope, get back to business.

The first major announcement on housing has been the confirmation of both parties pledge to ditch the HIP. The property industry could not have been more unequivocal in their warnings about the implementation of HIPs.
The Labour Government’s response to these concerns ended up undermining the policy itself, throwing the baby out with the bathwater by removing the compulsory survey and therefore much of the value of the HIP.

The new Government will take a different approach, but although the plan is confirmed, the timescale for its delivery is far from clear. HIPs may not continue to be a priority among early tasks of a Queen’s Speech and Emergency Budget. The new Government has the option to suspend HIPs ‘unilaterally’, without consultation or legislation, which would be a quick and effective means of demonstrating the potency of a Government in the event of Parliamentary deadlock. Alternatively, a consultation could be carried out and the legislation scrapped as part plan to roll back legislation introduced by the departed Labour Government.

Other eagerly awaited housing detail includes changes to planning regimes, scrapping or diluting various hurdles to make the provision of new homes a simpler process. The new Government has much to do.


Grant ShappsGrant Shapps has been appointed as new Housing Minister. The MP, re-elected for Welwyn Hatfield with a 17,500 majority, tweeted, “On my way to the Ministry to meet the same Civil Service team who have served all four of the Housing Ministers I’ve shadowed. How strange.”

However, his appointment is not at all strange and will be warmly welcomed by most in the property industry. Mr Shapps, Tory Shadow Housing Minister since 2007 has impressed us with his knowledge and understanding of the key issues facing the sector and we at PROPERTYdrum are delighted that David Cameron has recognised his strengths and experience.

Commenting on his appointment, Grant Shapps said, “It’s a huge honour and privilege to be appointed as Minister of State for Housing and I very much look forward to getting down to the issues of State. It’s a role I feel very comfortable in and well prepared for, having shadowed the brief for three years, facing four different housing ministers in that time. I look forward to continuing and developing my relationships with the industry and feel sure that our new Government will be able to make genuine improvements to the housing industry which has suffered so badly under 13 years of Labour Government.”

He has also been made a Privy Counsellor – earning him the title The Right Honourable Grant Shapps MP, but he will not be attending Cabinet. Mr Shapps’ predecessor John Healey was a regular at Cabinet meetings under the Labour administration. Instead, Mr Shapps will work under new Communities Secretary Eric Pickles in the department for Communities and Local Government who will attend Cabinet meetings.

Former Liberal Democrat Shadow Housing Minister Sarah Teather, has been given a role in the Department for Education under Michael Gove.

The Good News

  • HIPS
    Top of most estate agents list is of course the fact that the HIP is to be ditched, with the EPC retained as required by EU law.
    The LibDem plans to impose a ‘Mansion Tax’ on all properties valued at more than £32million has been dropped.

The Bad News

    There are fears of a possible fire sale of UK property assets as the new government is expected to increase the flat rate from 18 per cent for non-business assets to anywhere in the region of 40 per cent to 50 per cent. It is unlikely that the capital gains tax changes would come into effect immediately and we could see residential properties marketed to avoid their owners taking a hit. This is doubly bad for the Private Rented Sector as it may not only take homes out of the rented market, but could seriously limit the attraction of residential investment if the sums don’t stack up for small private investors.
    The Conservatives had pledged to raise the level of Inheritance Tax to protect the majority of ‘ordinary’ people from losing huge chunks of their inheritance. The plan was for Inheritance Tax to apply only to properties valued at £1,000,000+. This pledge has been shelved as one of the compromises with the LibDems. Industry comment

 Industry Comment

Liz Peace“We congratulate Grant on his appointment to the role which, under Labour, had the biggest staff turnover of any government position.” Liz Peace, Chief Executive of the British Property Federation, said, We have dealt extensively with Grant Shapps during his tenure as shadow minister and his extensive grasp of the sector’s many issues will mean he can get down to business right away. His enthusiasm and ideas will go a long way to helping reshape our housing industry, but there will be numerous challenges ahead.”

“Our latest research shows that rent levels are on the rise, indicating a potential market stabilisation, but also highlighting the dearth of available rental properties.” said Ian Potter, Operations Manager. ARLA says that the new CGT policy could create a shortage in rental property supply as investors look to sell off their portfolios and also deter future investors from entering the private rented sector. “With the anticipated increase in Capital Gains Ian PotterTax rates for non-business assets, we could potentially see a fire sale situation arise in the buy-to-let market with investors offloading properties. Consequently, the number of available rentals will greatly diminish and the fragile market recovery jeopardised. There are some potential solutions, one of which is that landlords should be treated as exempt businesses. For example, could the new Government propose taper relief, or rollover relief into the CGT changes? We need clarity before this new Government risks damaging the confidence of the recovering property market.”

“That failure to implement the decision to scrap HIPs quickly would confuse consumers and the housing market.” Peter Bolton King, NAEA CEO, warned, “This is great news for Peter Bolton Kingthe housing market and for house buyers, few of whom have paid much attention to these pointless packs. It is also good news for sellers, who will no longer need to shell out hundreds of pounds for a piece of pointless regulation that benefits no one. But it is vital that the new Government acts on this commitment boldly, decisively and quickly. Sellers are not going to be prepared to spend hundreds of pounds now if they feel they won’t have to in a few months. The implications to the market of thousands of people suddenly deciding to hold off selling their home could be severe.

"This quick decisive decision to scrap HIPs is good news for the property market.” Stephen Ludlow, Director of ludlowthompson. com

“It’s great to hear about the appointment of Eric Pickles as Secretary of State and Grant Shapps as the new Minister for Housing.” Sarah Webb, CIH Chief Executive, said, “Mr Pickles has considerable experience around local government and CIH has had positive and strong dialogue with Mr Shapps over the last three years while he was Shadow Housing Minister. We look forward to working with both of these key appointments in what is a challenging time for the economy and housing markets.”

“This latest ministerial appointment shows some consistency as Grant Shapps has had the Shadow Housing brief for a number of years.” Simon Gordon, Head of Communications, National Landlords Association said, We very much look forward to working with him on the housing challenges before the sector, but it is disappointing that he will not be attending Cabinet.

Paul Smith“The demise of HIPs had come not a day too soon.” Spicerhaart CEO Paul Smith said, “Once Home Condition Reports were abandoned, HIPs became a pointless exercise. They didn’t stop timewasting or sales falling through and the public showed no interest in looking at them whatsoever. The one saving grace of this failed Labour legislation is that EPCs are to be kept. As for the industry, we’re now in limbo land. Do we sell HIPs until the law is changed, or don’t we? We need a clear timetable and a period of transition.”

“Quest is urging the new Conservative-led coalition government to consider adopting a version of the Scottish Home Report in England and Wales.” James Sherwood-Rogers, MD, Quest said, “There would be real advantages of incorporating the contents of the Home Report in this new solution for England and Wales to deliver true transparency to consumers. It is also important to point out that there would be little cost difference for consumers, as the condition survey would be in place of the legal searches. By adopting this solution, we believe the new Government can quickly implement a solution that results in minimal disruption whilst maximising consumer benefits”