Game of Loans: How the general election may play a part in short-term development funding
It's good to know that we have a prime minister that is keeping everyone on their toes.
The shock decision to call an election seems to have been reasonably well received by the public and we know that the British electorate love to flex their democratic muscles.
I suspect the upcoming election will cause a temporary slowdown in house sales, which will inevitably have a knock-on effect for the short-term lending sector. Given the shock election/referendum results of the last 12 months, I wouldn't like to be a pollster trying to analyse the probable outcome. While the outcome may appear obvious, this will provisionally increase uncertainty in the market which isn't a good thing. The sector will be hoping that the election result will create stability in the long run, particularly with regards to our Brexit negotiations. It's fair to say that this period of uncertainty that we are operating in will be increasing in the foreseeable future.
The biggest impact the government could make in a short space of time would be to make significant changes to the planning system. I don't see the election having an immediate effect on the planning system. The flow of communication between legislators and local councils is already poor and deliberately vague. It's open to different interpretations as this allows the government to pass on a lot of their responsibility with regards to housebuilding. The housing white paper from earlier this year is another example of some good talk with a lack of genuine substance. What we need to see from the new government is genuine action, and the issues with the planning system is an excellent place to start. I have to also add that I'm a fan of the government's recent initiative to list brownfield sites that may be ripe for development, although the true success of this won't be fully realised for years to come.
The development finance market is intrinsically linked to how many new planning decisions are churned out by local councils. I'm not a fan of pie-in-the-sky figures about how many houses we need to be building, and I think we just need to accept that given the current parameters it's impossible to satisfy the levels of demand for housing in the UK. However, the bottom line is that currently we aren't building enough. Clever schemes, such as permitted development, are good examples of outside the box thinking (by legislator's standards), but this is really just scratching the surface. It would be great to see a huge overhaul of the planning system and should this happen, it would open up more opportunities for the good development finance lenders out there.