An increasingly desperate Ed Milliband ignored advice from his own party and included housing policies in Labour’s election manifesto that did not address the underlying causes of the housing crisis and instead would be detrimental to the housing market and to the economy overall. Proposals to cap rents, to introduce mandatory three year tenancies, the prospect of a Mansion Tax and high SDLT rates for foreign buyers, not to mention the abolition of non-dom status had the property market rattled. Labour’s defeat is good news for the housing market, both for tenants and homeowners.
Sir Michael Lyons published a housing review for the Labour party earlier this year in which he stated the greatest threat to homeownership was rising house prices. House prices were accelerating at such a rate that it was making homes unaffordable. He suggested that housebuilding needed to be accelerated and the local councils needed to abolish much of the red tape that plagues the planning process.
Instead, Milliband pledged to cap rents to bring them inline with RPI even though most private sector landlords keep rents at this level already. The Labour leader also pledged three year tenancies despite these being unpopular with tenants and prohibited under current lending guidelines.
Even though the government has said a further £1.4 trillion is needed in investment for the private rental sector, Milliband proposed higher SDLT rates for foreign buyers, effectively discouraging foreign investment. The Mansion Tax also rattled the market as many landlords had bought in gentrifying areas that had seen substantial capital growth, meaning that relatively inexpensive homes had increased in value to the extent that they would incur an addition tax, eliminating most landlords profit margins.
“Like many in the property industry, we are very happy with the election results,” says Benham & Reeves
Estate Agents MD Anita Mehra, “In talking to people, many said that if Labour was to come into power and taxes like the Mansion Tax were imposed, they would sell and move their assets out of London. We also encountered foreign investors in Asia who were equally concerned and were hesitant to invest in the UK. A Conservative win is the best thing that could possibly happen to the private rental sector and to the housing market.”
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