Purplebricks backs Labour plans ‘because rental sector is a mess’

The chief executive of Purplebricks says he’s backing Labour’s house building plans because of the state of the private rental sector. 

Sam Mitchell says: “The rental market is still a complete mess and there is a significant way to go before the outlook can be said to be as positive for prospective homeowners. The focus for the coming months must be lowering the barriers to homeownership for first-time-buyers, which will only be achieved by Labour pushing forward with its plans to ‘get Britain building’.”  

Mitchell’s comments follow the release of the latest house price index by the Halifax which says that in July UK house prices increased 0.8% over the month.

The average house price in the UK is now £291,268 - over £2,000 more than just a month ago. Annual house price growth is now running at 2.3% according to the Halifax. The only region of the UK to see a house price fall over the past year is now the East of England, down 0.4%. London is up 1.2% with the average home costing £536,052.

Mitchell is not the only industry figure concerned about first time buyers being able to graduate from the rental sector.

Holly Tomlinson, financial planner at wealth consultancy Quilter, says the recent base rate cut may push FTBs into purchasing but they have a problem. 

She says: “Prospective buyers are now faced with a dilemma about whether to fix their mortgage now or wait for rates to come down further. Lots of clients in the midst of remortgaging or buying are considering tracker mortgages without early repayment charges, allowing them to benefit from future rate cuts with the option to fix when rates are lower. However, many people like the certainty of a fixed-rate deal.

“Further house price rises, while naturally good news for homeowners, continue to make it incredibly difficult for first-time buyers to find a route to homeownership without significant help from the Bank of Mum and Dad or having to wait until much later in life to build up the necessary size of deposit. This will end up being a difficult area for the government to truly tackle, as while supply and demand play a large part in why house prices are rising, an even bigger piece of the puzzle is slow wage growth when compared to house price inflation.”

And Propertymark chief executive Nathan Emerson adds: “With inflation now down at targeted levels and with a very welcome cut in interest rates last week, Propertymark is extremely optimistic to see a real uplift across the housing sector over the coming months. Assuming the economy remains stable in September, it would be good to see the central bank continue to gradually cut interest rates as conditions permit. It is a case of all eyes on the UK Government regarding their housebuilding programme, as well as learning more regarding support for potential first-time buyers.”