Those within the property industry are welcoming the general election result. Although the UK is certainly in the midst of a housing crisis with particular issues within the private rental sector, the Labour party’s proposals for housing reform were widely regarded as counterintuitive.
One of the first and most widely publicised proposals was the Mansion Tax. Initially conceived by the Liberal Democrats, this policy would have seen an annual tax imposed on all properties valued at £2 million and above. Even after the Liberal Democrats backed away from this policy as unfeasible and unfair, Labour continued to champion the tax, making it a central tenet of their manifesto. Thankfully the prospect of such a tax along with Labour’s rent control proposals have been eliminated
The City of London has resolutely welcomed the Conservatives’ win. The party warned of French-style post election stock market crash. Thankfully, this was avoided and the FTSE and Sterling both saw strong gains in the wake of the election result. Even before the election, most voters stated that they trusted the Conservatives with the economy more than Labour, even if it meant further years of austerity.
Some of the Conservatives’ proposals are controversial, particularly the expansion of Right to Buy which will take social housing out of the rental sector. This will inevitably force more people into the private rental sector, increasing demand and in turn, rents. Greater supply within the sector will be needed to keep properties affordable.
Capital values would have increased regardless of the election result, given that the population of London is expected to grow by 1.5 million over the next 15 years. With the prospect of the Mansion Tax and rent controls eliminated, capital values are expected to increase at a faster rate than would normally seen in a post recession economy.
It is also anticipated that sensible measures to make housing more affordable, including encouraging further housebuilding, the promise to keep the top rate of income tax and national insurance at current rates, and increasing the inheritance tax threshold to £1m for properties being passed onto children are welcome by the property industry.
We anticipate there will be an increase in transaction levels after a subdued first and second quarter. Properties valued at £2 million and above which were threatened by the prospect of the Mansion Tax will certainly see increased interest. Over the long term, investment in the London property market seems to be a safe bet.
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