Property politics
With the General Election firmly behind us, Andrew Turnbull, managing director of Wellesley Finance, shares his thoughts on how the new government can support the struggling housing market…
HOUSING AVAILABILITY and affordability were hot topics in the run up to the recent General Election, with all parties promising to tackle the housing crisis head on. But Wellesley has been anticipating housing sector reform for several years now, even adjusting its own business model to meet future demand.
Where once the property lender focused its portfolio in London and the South East, now it is primarily interested in the East and West Midlands, and cities such as Manchester, Birmingham, Leeds and Nottingham. This was a calculated shift designed to take advantage of areas where property prices were set to rise beyond the national average – and this foresight has paid off.
“In the run up to the General Election, housing availability and affordability were very hot topics – and understandably so,” says Andrew Turnbull, managing director of Wellesley Finance. “Wellesley has been fortunate enough to have spotted it at an early stage so it’s certainly something that was not a surprise to us.”
The new government has already pledged to increase the availability of housing, and to improve the planning processes for new developments, in an effort to help first-time buyers get a foot on the property ladder. However, Wellesley has already turned its attentions to another group of underserved homeowners.
“It’s not just first-time buyers who are struggling to find suitable properties – it’s those people who were first-time buyers five or six years ago who thought their property would rise in value, but have not actually seen much appreciation on the value on the homes,” explains Turnbull. “They are now looking to buy a bigger family home, but at an affordable price.
“In this business we’ve got to think five, 10 years ahead, not just two years ahead.” Last year was one of the slowest years for housing growth overall, with Nationwide recording a 1.4 per cent increase in the average property price across 2019. But Turnbull notes that this headline figure doesn’t tell the whole story.
Someone who bought a property in the South East five years ago will find that their home has not really grown in value, whereas a homeowner in the West Midlands could have seen the value of their property rise by more than 10 per cent. “If you were to dig down and look at each region and city, you would see a huge differential in housing price growth,” he says.
“You would also see a big difference between houses valued at say £800,000 and over, versus those that are more affordable. And that’s very telling.” To encourage more activity in this segment of the market, Turnbull suggests that the government could consider allowing first-time property sellers to roll their Help-to-Buy allowance into another property. “I’m sure the intention is not to create a cliff edge,” says Turnbull. “However, it really does just highlight how long Help-to-Buy is probably going to have to be kept in place for the foreseeable future.
This is something that we bear in mind when we are looking at whether we finance developers building one-bedroom flats or four-bedroom houses. Whilst we don’t have a particular dependency on Help-to-Buy, we do have to consider how that spectrum of first-time buyers is able to move through the property ladder to find their next home.”
This focus on the future means that Wellesley will always be refining its offering and searching for new opportunities in the housing market. But Turnbull is modest about the platform’s success, and track record of identifying trends. “What we do ultimately is manage risk,” Turnbull says. “And we do this by continuously improving your policies. It’s a process of constant refinement.”