The new political landscape and what it means for housing
Brexit and the changes in Westminster and Whitehall herald a new and uncertain chapter in British politics. Whatever the sector's response, understanding the political environment and what lies ahead has never been more important. We caught up with Paul Hackett, director of the Smith Institute, who will explore what Brexit means for our sector in an executive briefing at our London office on 3 November.
What do you think Brexit means for housing?
Brexit means Brexit – that’s about as far as we seem to have got. I think at the moment the only thing we really know is that it means uncertainty. The long-term impact is something even our government doesn’t really know. We are entering Donald Rumsfeld’s’ 'unknown unknowns'!
It would be nice to know that everything will be alright, but we just don’t at the moment. All we know is that we have voted to leave the European Union.
The impact on supply and demand for housing in the different housing markets will in large part be determined by the macro-economic fall-out, not least the effect on growth and inflation. A rise in interest rates is certainly a game changer.
What impact do you think this has had on housing organisations?
I think the uncertainty in itself is damaging. It makes planning for the future all the more difficult when there are enough challenges in the housing landscape as it is. It’s not as if we were in a boom period before Brexit; housing executives are already facing difficult decisions and I think Brexit has made making those decisions even more difficult.
It brings to mind an image of a cartoon of someone with a cloud following them around and I think that’s how a lot of providers feel at the moment. Until there’s clarity life will be difficult and it looks like it could be some time before we get that.
What do you think providers are most worried about?
There were already plenty of things to worry about. Policy wise there’s right to buy, the rent reduction, the LHA cap, pay to stay, and more. And, of course, we’re still going through a period of welfare austerity and tight lending.
I think what Brexit has done is add further concern into that mix. So, for example, if you are an organisation which employs a lot of overseas workers it’s likely you are going to be concerned about the long-term impact of Brexit on your workforce. Housing boards will also be keeping a careful eye on what’s happening to incomes and unemployment.
Then there are concerns about the long-term impact on the construction industry and threats to community cohesion. I also think there’s a general feeling of caution because of this uncertainty - a feeling that anything which requires significant investment could be a risk when the long-term economic impact of Brexit is yet to be revealed.
Is it all doom and gloom?
Of course it isn’t. One thing that hasn’t changed is that we all just want to get on with it and that’s what people are doing. Many of the economic and demographic drivers are the same as they were before, although if immigration does fall, that will translate into lower population growth in high housing demand areas.
The great work housing organisations do to meet those challenges will continue. The difference is that those challenges have become even more difficult.