Greg Clark faces challenge to fulfil promises on home ownership

New communities minister Greg Clark faces the difficult task of fulfilling his party's election promise to get more people on to the housing ladder without fuelling a renewed property bubble.

The appointment of the MP for Tunbridge Wells marks a striking change of tone compared with his predecessor, Eric Pickles.

Mr Pickles aggressively waged war on his own ministry, attacking what he saw as wasteful spending at the Department of Communities and Local Government. The gruff rightwinger relished the deep cuts that he was tasked with administering to social housing and local authorities.

The more mild-mannered Mr Clark is likely to adopt a less combative approach; even as he has to conduct another round of spending reductions.

A Tory moderniser, who attended a state school in Middlesbrough, he was in the shadow cabinet before the 2010 election. On that occasion he failed to reach the top table because David Cameron had to make space for Lib Dem cabinet ministers.

Mr Clark worked painstakingly in a series of second-tier ministerial roles including universities minister and cities minister, where he devolved powers through several "city deals" including Manchester's flagship settlement. More such agreements - handing down further powers and money from Whitehall - are expected during the current parliament.

As the party digests last week's unexpected win, the first thing on Mr Clark's desk as he settles in at the DCLG is how to execute a set of potentially conflicting policies during the next five years.

High-profile election promises on home ownership and housebuilding included selling 200,000 new homes to first-time buyers at a 20 per cent discount to the market price; continuing the Help to Buy scheme that subsidises buyers; and giving housing association tenants the right to buy their homes.

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Meanwhile, a vow to keep mortgage costs low could add to the upward pressure on house prices from a continued lack of new supply.

Gavin Smart, deputy chief executive of the Chartered Institute of Housing, said that the Conservatives know there is a housing supply crisis and that the country needs to build a lot more homes; but without increasing housebuilding volumes, the new government's support for home ownership risks pushing up prices.

"Supporting people into home ownership helps the people it helps, but if we don't match that with a coherent supply plan then the most likely result will be house price rises," he says.

Matthew Pointon, an economist at Capital Economics, said the Conservatives' fiscal austerity plans were "likely to allow interest rates to stay lower for longer", leading to "a further dip in already record-low mortgage rates" that could provide a "tangible boost to the [housing] market".

The top end of the London market was particularly badly hit by the prospect of a Labour government imposing a tax on homes worth more than £2m. That market is now seeing a relief rally with buyers returning to the market within hours of the Conservative victory on Friday morning.

Estate agents predict that prices of homes worth more than £2m could rise by as much as 20 per cent in the coming 12 months, as demand bounces back.

Mark Hayward, chief executive of the National Association of Estate Agents, says he is concerned about whether the Conservatives are going to be able to "cash the cheque of promises they've made for home ownership within just five years".

"Without tackling issues over planning, infrastructure and skills capacity, we worry that they will be unable to meet the growing demand [from] first-time buyers," he says.

Susan Emmett, head of residential research at property advisers Savills, says the continuation of Help To Buy will cause housebuilders to "breathe a sigh of relief". About 35 per cent of all sales by the major housebuilders have been backed by Help To Buy since the scheme launched two years ago, she says. However, Ms Emmett warns that despite Help To Buy, the government will find it hard to boost housebuilding. Last year about 160,000 homes were started on site by housebuilders - a shortfall of between 40,000 and 140,000 homes a year according to the consensus among economists and academics, who say that Britain needs to build a minimum of 200,000-300,000 a year. That shortfall is set to increase to 180,000 over the life of the new parliament, Ms Emmett forecast.The Conservatives have promised to increase housebuilding but refused to specify a target for the number of homes they believe they should aim for. Alison Platt, chief executive of Britain's largest estate agency Countrywide, says the government will need to build a series of garden cities to meet its promise to increase housebuilding levels, and called on it to "take this a step further by reviewing precisely what we call greenbelt today and look to free up more land for sustainable development".This would put the government on a collision course with some of its voters in the shires, where new development is unpopular. Mr Pickles blocked the construction of nearly 10,000 homes before the election in a bid to avoid antagonising voters."The government faces an implementation challenge to resolve the relationship between its ambition to build and how the localism planning framework operates," Mr Smart said.

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