Earlier this afternoon, it was announced that former chancellor Rishi Sunak would become the UK’s new prime minister after Penny Mordaunt dropped out of the running for party leadership.

He will be the country’s third prime minister in as many months, replacing Liz Truss who resigned from the role on 20 October after 45 days in office. 

On Twitter, Truss says: “Congratulations @RishiSunak on being appointed as leader of the Conservative Party and our next prime minister. You have my full support.”

Meanwhile, Cluttons director of research and insight Grainne Gilmore says today’s appointment of a new prime minister is a “much-needed step away from the political instability of the last few months”.

“The next hurdle is the budget next Monday, but if there are no major surprises, there will then be an opportunity for politicians to get back to business as usual, something which the markets and businesses will welcome.”

Speaking on residential, Gilmore adds: “More political certainty should mean that money market rates, which determine the pricing of fixed-rate mortgages, begin to recede, which could bring down the cost of fixed-rate deals.”

“However, it is very likely that the Bank of England will increase the base rate next month, which will result in higher payments for those on variable rate home loans.”

“Once the government is stabilised, they should prioritise providing clarity around housing policies, including planning reforms, to provide a clear steer for homeowners and businesses across the industry.”

Audley Group chief executive Nick Sanderson says Sunak “has a task on his hands and must get his feet under the table quickly”. 

“Key issues like housing, health and social care have been left on the ‘to-do’ list through the political turmoil of the last few months, and now desperately need attention. This doesn’t have to mean investment, especially at a time when the government needs to look at cost cutting, but it does require thinking cleverly.”

“Planning reform, which mandates for age-specific housing in any new housing scheme, would have the single greatest impact on both the housing market, but also the way we look after our ageing population.”

“And importantly, for the new prime minister, this doesn’t need a cash injection from the government coffers. Progress has started with the cross-departmental Housing with Care taskforce, and this must now be prioritised.”

Hargreaves Lansdown senior investment and markets analyst Susannah Streeter comments: ‘’Gone are the days when Rishi Sunak was prepared to open the government coffers up to see the UK through a crisis. The pandemic spending spree is well and truly over and the former Chancellor will take the top job in the guise of a strict and austere headteacher.”

“He will be determined not to see the bond market run amok again, threatening the country’s financial stability. He will be revelling in the fact that his curriculum of higher taxes and curtailed spending, which he preached on the campaign trail, is already being followed.”

“However, it’s likely he will take an even harder line now on government budgets, given the punishment threatened to be handed out again comes in the form of much higher government borrowing costs. He will also want to show he is cooperating with the Bank of England by being ultra-conservative fiscally in a bid to tame high inflation.”

CBI director-general Tony Danker adds: “Congratulations to the new prime minister. He has a track record of seeing the economy through difficult times and is now coming in at a time of great uncertainty with tough choices ahead.”

“The new prime minister can lose no time in easing the impact of market turmoil on households and firms, and helping to restore fiscal credibility. A fiscal plan for the medium-term next week that is both credible and a platform to generate economic growth will be central to achieving that.”

Sunak served as chancellor of the exchequer from 2020 to 2022, notably during the coronavirus pandemic.

Previous to this, the MP for Richmond in Yorkshire was chief secretary to the treasury, from 2019, after having worked in the ministry of housing, communities and local government for a year before that.

His notable contributions regarding housing include the 95% LTV mortgage scheme, which was announced in his 2021 Budget, alongside the stamp duty cut extension.