Two months on from the election and it is very clear that this government is Conservative only in its composition.
The Chancellor has announced a number of policy initiatives, but perhaps the most headline-grabbing is that of non-protected government departments being expected to come up with spending savings of up to 40 per cent of their budgets.
If I think back to the coalition, I think the prospect of this happening with the Liberal Democrats having seats in the cabinet would have been unlikely at best, and these types of proposals would likely have resulted in a very messy divorce much earlier in the last parliament.
What the Chancellor does now have of course, is a working majority in parliament, albeit a small one, and he seems very focused on transforming what he sees as the role of central government.
In short, that includes smaller central government and greater autonomy, decision-making and control of funds at regional and local level.
The budget held few surprises for the housing market , but there was one specific curb on the Buy-to-Let market of limiting landlord mortgage tax relief to basic rates of income tax, although this is not due to commence until 2017 and will be in introduced in a phased approach over a four-year period.
Those landlords who are affected should therefore have plenty of time to adjust to this and, as a result of the change, we may see more properties being owned within the structures of Limited Companies for Buy-to-Let rather than by individuals due to the differing taxation approaches, particularly as the Chancellor also announced proposals to reduce corporation tax rates.
The housing and mortgage markets have been steady through the first half of 2015 and, as we have commented previously that we did not witness any significant slowdown in activity in the lead up to the general election, neither have we seen any significant change in momentum following it.
Gross mortgage lending in the first half of 2015 is estimated by the Council of Mortgage Lenders to be circa £96bn, which is almost identical to the same period in 2014.
Activity in the second half year is historically generally higher than the first, although remortgaging activity could be stimulated further following comments from the Bank of England Governor, Mark Carney, who in addressing the Treasury Select Committee commented that the “point at which interest rates may begin to rise is moving closer, given the performance of the economy”.
Although he has previously offered similar commentary before and no change has subsequently occurred, expectations are now potentially for a Bank Rate rise in early 2016.
Borrowers already appear to be more aware of the improving overall economic picture and the potential impact on monetary policy, and we anticipate that remortgaging will continue to increase as borrowers will look to lock into attractive rates ahead of any Bank Rate rise.
On the wider economic front, inflation has once again dipped back down to zero, but there was an unexpected rise in the unemployment rate, although most commentators feel this is something of a one-off.
What this may point to is further evidence of the skills gap that has been much talked about, as there are literally thousands of job vacancies across the UK economy but it would appear many of those who are unemployed, particularly long-term, do not possess the skills to enter employment.
The Chancellor’s further cap on benefit payments is clearly designed to push more people, many of whom are longer-term unemployed, into work, even if that is relatively unskilled lower paid work and is very much part of a Conservative policy.