Painting the Houses Blue
After the battle
The uncertainty is over and while some voters are still in shock, others are breathing a sigh of relief.
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A majority, albeit a small one for the Conservatives, means that the government is free of coalition bargains and can concentrate on its own priorities. But what does this all mean for the housing markets?
First, based on the experience of the last eight elections, there’s likely to be a bit of bounce in transactions over the next few months. Sales are typically subdued in the run up to an election, but transactions end about 15 percent above what you’d expect in an ‘average year’ as buyers return to the market. That boost lasts around six months. However this time we expect to see an additional boost as the effect of the December stamp duty cuts start to feed through into markets priced below £1 million.
Second, now that mansion tax is off the table we should expect reluctant buyers to feel more comfortable about completing deals in the £2 million plus bracket. Media reports of huge surges in the market are overblown, but a lower property tax regime will undoubtedly calm some nerves and help boost confidence. And with economic conditions improving too, that’s good news for transactions.
While this is good news for many homeowners there are some existing policies which were imposed during the last parliament wh h will weigh against this. In particular the significant increase in stamp duty on properties over £2 million, the hike in the Annual Tax on Enveloped Developments (ATED) rates and the introduction of Capital Gains Tax on properties owned in company envelopes. These all have yet to work their way through the market. So while we expect activity to increase, price growth will likely remain subdued. In London in particular, the rapid price growth of last year means that value for money is still on investors’ minds. That means the drift to less expensive priced properties is likely to continue, but that should help sellers’ price expectations to become a little more flexible too.
The table outlines the key Conservative housing policies from their manifesto, we would expect other key policies already implemented (e.g. Help to Buy ISA) to be continued.
Just because something is in the manifesto, doesn’t mean that it will happen and neither does it rule out other policies coming forward. There are no specific policies on council tax or on planning, but it is clear that there are big concerns about the fairness of the council tax bandings and that the planning system is still a cause of delay and distortion in the process of housebuilding. We shouldn’t be surprised then that these issues continue to keep turning up in the Housing Minister’s inbox and onto the floor of the House of Commons.
Conservative Manifesto - Housing Policies
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Affordability and first-time buyers
Mansion Tax/High-value property levy
Help to Build
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