01 Jul 2020
Posted in Banking
Prime Minister’s planning reforms to spur mortgage boom through greater housing affordability in urban areas
Following Prime Minister Boris Johnson’s radical changes to the planning system as part of his plans to guide the UK out of the COVID-19 pandemic;
Katherine Long, Banking Analyst at GlobalData, a leading data and analytics company, offers her view on the effect it would have on the UK mortgage and wider home loans market:
“The new changes should enable greater housing affordability by keeping a lid on house prices, allowing more consumers to afford a mortgage. The rules themselves will give greater freedom to owners of defunct residential and commercial property to change their use or build houses in their place without formal planning permission. Residents will also be able to extend their home upwards, subject to neighbor consultation.
“In the UK market, the problem has always been a lack of housing, particularly in high demand areas such as London and the South East. Given that over 90% of consumers in these areas want to own their own home within the next five years, according to Collyer Bristow, these reforms are likely to produce a significant amount of new housing in urban locations.
“Those properties most likely to go are B and C grade office space, as well as older shopping malls and retail units just outside prime retail areas, of which there are many. Demand for these properties in their current use is likely to fall further post-COVID-19, as shops and restaurants go out of business and people consider working from home.
“Lending should also rise as consumers borrow to make changes to their home, such as renovating or installing a home office. The news bodes well for mortgage providers as the high cost of housing has kept mortgage approvals below their pre-crash level over the last ten years.”