What it means for our residential markets
As Britons wake up to the result of the 2015 General Election, many breathe a sigh of relief whilst others are no doubt disappointed. Stability has won and David Cameron will remain as Prime Minister for a further term, albeit on his own terms since the Conservatives are set to win by a slim majority rather than having to share and compromise with the increasingly insignificant Liberal Democrats. As the Tories approach the magic number of 326 seats, we look at the implications for the housing market in the UK.
Many landlords (and agents!) will be relieved to hear that the AST is safe. Labour had intended to implement 3 year tenancies, capped rent reviews and a ban of tenant charges for essentials such as references in order to regulate a market that they deemed as broken. The Conservatives will do no such meddling and the current level of flexibility in tenancies will remain with most being 12 months initially with a 6 month security of tenure. Landlords and tenants can agree to have a longer fixed term if they wish, just as they could before the Election.
The housing market has seen the biggest value gains under David Cameron since Tony Blair’s tenure through a number of macroeconomic factors and little bit of meddling in the form of Help to Buy. There will be a Help to Buy ISA for first time buyers to help them get a subsidised deposit for a home. There is a further initiative in the form of a right-to-buy policy which will allow 1.3 million housing association tenants the opportunity to buy their homes at a discount which will be funded by the State. Whilst this displays shades of early 80s Thatcher policies for social housing stock, no doubt these households will be pleased. At the £2m plus ownership there will be relief that there will be no mansion tax. There are already higher stamp duty thresholds in place at this end of the market which affects the cost of transactions rather than an annual imputed rent thanks to the revision made by George Osborne in 2014’s Autumn statement. The Tories have also pledged to deliver 200,000 new starter homes for first time buyers aged under 40 who will secure a 20% discount and 275,000 additional affordable homes by 2020.
Further policies which will affect the housing market nationally include the couples’ inheritances tax allowance going up to £1m, a top up of £175,000, the creation of a £1bn brownfield regeneration fund over four years to unlock sites for 400,000 homes and the delivery of both HS2 and HS3 trainlinks.
In re-electing David Cameron, UK voters have shown themselves to be risk averse, economy focussed better-the-devil-you-knowers. With the horrors of the credit crunch still embedded to their memory and the warning signs from Greece that austerity may be unpleasant but necessary, they have voted with their heads if the books are to be balanced.
The Liberal Democrats have had their chance to share and proved unpopular to their core voters, perhaps unfairly as they played a significant role in keeping the coalition more centralist and sheltered from those right leaning Tory back benchers whom John Major so eloquently called “those bastards”.
If there was ever any doubt that Britons regard the economy as the number one priority, just look at how well George Osborne (Tory Chancellor of the Exchange) has done in his constituency versus the likes of Ed Balls (Labour Shadow Chancellor) and Danny Alexander (Lib Dem Chief Secretary to the Treasury) who have both lost their seat.
Our residential market thrives on certainty, which for now has been restored…… at least until the Euro Referendum.
Telephone: 020 7490 1122