10 April, 2015
With the UK heading quickly towards its next general election, the coming months promise to be an interesting period for the country's property market. After a much-needed spell of growth and fresh optimism among buyers, sellers and lenders alike, the odd bump is starting to appear on the road to recovery.
According to a recent survey from the National Association of Estate Agents (NAEA), 46 per cent of its members have already noticed the momentum slowing recently, and one in four (27 per cent) think the upcoming vote will be the single biggest influencer on the property market in 2015.
So what exactly is happening now, and how can we expect things to change post-election?
A new kind of uncertainty
The housing market is arguably more prone to fluctuation than any other sector, and its status will always represent the feelings of the property-owning public. When people believe they're secure and comfortable, they buy more and prices rise as a result. In any other situation, the opposite will happen, and a vicious cycle can quickly ensue.
Few things can influence the population's overall sense of wellbeing more than political uncertainty, and that's exactly what we're seeing now. With the potential of a major governmental change in mind, there's something of a 'wait-and-see' mentality developing among both buyers and sellers.
Housing will always be a hot topic in politics; it plays a prominent part in most general elections, influencing the policies and agendas of all major parties, but this year things are a little different. May's event marks the first time in over 40 years that the UK has gone to the polls under a coalition government. Of course, this adds to the public's house-related hesitations, and with less sign of a clear favourite, there's still plenty for the parties to play for.
What changes should we be looking for?
Policies relating to the property sector feature significantly in all of the main parties' manifestos, which is one reason why things all seem so up in the air at the moment. In particular, most people will be looking out for changes in property taxes and rental market controls, as these could have a significant influence on future sentiment.
Significant homebuilding plans are also likely to pique interest, as would the implementation of any new Help-to-Buy-style schemes that could make it easier for first-timers to get on the ladder.
Speculation will, of course grow as we edge closer to the big day, but a couple of points are being talked about more than others.
Labour and the mansion tax
While there's no clear favourite at present, Labour is certainly one of the three biggest parties in contention, and should it get the majority vote in May, leader Ed Miliband has promised to implement a controversial new mansion tax. According to the NAEA survey, 57 per cent of member agents believe it'll have a negative impact on the property market.
Labour wants to implement a new tax on all properties costing upwards of £2 million. With prices rising in recent years, though, the number of residencies that fall into this category has grown substantially, meaning more people than first thought will be impacted.
If this happens, the likelihood is that many homes valued around the £2 million mark will be purposely bought and sold below the threshold to dodge the tax. The result from here could be a severe slowing in the growth of the £2m million-plus market.
Perhaps referring to the Liberal Democrat party, which has supported the idea in the past, Savills research analyst Sophie Chick said: "Two out of the main political parties still favour some form of mansion tax so owners and buyers will be rightly factoring it into their decisions as the election approaches."
A boost for first-time buyers
Some have argued that first-time buyers are likely to benefit most should the Conservative Party assume full power, as leader David Cameron has promised to focus his attention on the affordable end of the market. While the sector's health has improved dramatically in the past couple of years, the ladder is still out of reach for so many youngsters.
As part of its plans, the party will look to make an additional 200,000 affordable homes available to first-time buyers by 2020. These are likely to be developed under the nationwide Starter Homes scheme, meaning buyers stand to benefit from discounts of up to 40 per cent.
Not to be outdone, Nick Clegg's Liberal Democrat Party has promised to build 300,000 new properties every year by 2020, with Labour touting its own figure of 200,000. Whether these three promises actually come to fruition or not is yet to be seen, but it's clear that there will be an influx of new properties either way. Of course, prices are a crucial factor for the industry to consider going forward, but helping these first-timers onto the ladder in the first place will be key to keeping the market moving forward.
We will see changes in the property market after May's election, and if we trust the parties' intentions, these changes will be positive ones. The extent to which the market moves, however, will depend on a number of factors: how quickly the winning party puts its money where its campaigning mouth has been, what the banks choose to do with their mortgage-lending capabilities and how well the construction industry copes with rising demand.
We will only know after May 7th.