Thursday, 7 May 2015

UK Election 2015: Four important points that weren't on the front page

With the election now underway there's been a huge amount of media coverage on various policies and outcome predictions, but little has been on the front page regarding the property industry and what's in store for the housing market.

Having led our industry for the last 17 years, we can say that every election shares a number of common themes that we're seeing again in 2015, as expected. We've also been looking around to find some less publicised information out how possible changes in coming months will affect those investing, buying and selling property based on the outcomes at the ballot boxes today.

Here are the top four things to be aware of regardless of who is declared the winner in the morning:

1. Another sluggish pre-election market


As we've seen in previous years, there's been once again a market slow-down during the lead up to the election, with London especially seeing the effects of an inevitable lull in property sales. The market will almost definitely rebound to normal activity once this period is over - as it has done every time - but how quickly and to what extent depends on which new policies are introduced, and ultimately who is in charge tomorrow morning.

2. The possibility of rent caps


More than one party is considering introducing rental caps - preventing landlords and buy to let investors from increasing rental amounts over the course of agreed tenancies outside of the rate of inflation. The goal is to provide tenants with more security - but opponents state that this is unlikely to have a large positive benefit, with Boris Johnson drawing comparisons to failed policies in Ancient Rome and the Telegraph conjuring imagery of communist Vietnam.

Labour have also discussed the idea of pushing landlord's to provide three year tenancies to protect tenants - a move touted positive by those renting, but less so by those who own rental property who argue that the introduction of further restrictions is only going to hamper their business.

3. The return of mansion tax


The introduction of a mansion tax on properties valued above £2 million (so far avoided with 2014's budget) could also have an effect on the sale of property in the UK - especially Prime Central London. The main goal of introducing this tax is to increase government revenue from high-end properties, however, opponents complain that in large cities and conurbations across the country that the tax is short sighted, with some two and three-bedroom terraced houses being classed as "mansions" in London alone.

This wouldn't be an easy tax to introduce regardless of who was attempting to do so - so at this point any discussion on the likelihood of a new mansion tax is largely based on speculation.

4. A slow return to normality


Buyers and sellers tend to reduce their activity in the lead up to each election - and this year has been no different. Foxtons in London reported 3.1% lower sales revenue in Q1 2015 (although letting revenue grew 5.4%), and the number of sales so far this year is below average as many predicted. It's likely to take another 3 months before the market rebounds to previous rates - after the introduction (or lack of) new policies affecting property sales. Expect to see a return to normality towards the later half of this year once there is more certainty and confidence.

The property industry is always a point for debate and discussion by those in charge, but there is one common theme we notice every election: those who are best prepared following an election see the greatest returns on their investments. The market will be returning to its previous pace very shortly, and it's important to use this current break to consider the future of your business.

Whatever the outcome - and the likelihood of new legislation or changes in policy - David Phillips will remain on hand as a vital partner in your success - with a range of services at your disposal to make sure that you get off to a flying start in the post-election months.