Property has become a key issue in the upcoming election with heated discussions over housing shortages and affordability. Plus, there is the possible mansion tax and the impact this may have on the higher end of the market.
With just weeks to go before we head to the polls, we ask Anne Currell for her opinion on what the election could mean for the London property market.
Have you noticed changes in market activity in the run up to the election?
In the run up to the election we have sensed a degree of uncertainty across all price brackets but more noticeably towards the upper end of the market. How much of this is down to general market conditions or pre-election jitters is hard to ascertain. What has been shown in previous years is that pre-election jitters do not equate to a fall in prices. In fact, we are predicting a solid 5% uplift in central London in 2015.
Are there any specific policies which you think would dramatically affect the market in the months after the election?
The big topic of discussion is a mansion tax, which has been proposed by both the Labour Party and the Liberal Democrats. If passed, the tax would apply to properties worth more than £2m. About 80 to 90% of the properties that would be affected are in Greater London and the Labour Party believes it would raise up to £1.2bn in revenue. The concern in London is that it may put off foreign investors. London is a magnet for foreign investment in residential property due to its transactional transparency and its reputation for stability.
The threat of a mansion tax could send the message that investment is not welcome and lead to unpredictability. Equally, owners who have ‘accidentally’ become property millionaires due to high rises in property values would be targeted. If the mansion tax is imposed, we could see an influx of properties at this price point coming onto the market, as owners look to move to property that sits below the £2m threshold.
The Conservative’s main focus is on extending Help to Buy, a scheme designed to help buyers who can’t put forward more than a 5% deposit on a property. So far the scheme has been successful in helping 80,000 buyers onto the property ladder. However, only 6% of these buyers were in London. What is great though is that of the 80,000, 80% are first time buyers.
Housing is a key policy for London and will be an important policy for voters. What are the key issues surrounding London and housing?
The big issue in London is supply versus demand as the city is growing at the fastest rate in its history. The target of building 42,000 new homes this year is questionable, particularly when a key component of the new homes must be affordability. This means delivering on Shared Ownership and Intermediate Rent opportunities. Investment is needed in planning and London needs to develop in a way that opens up spaces and coordinates housing and transport. To get it right, the London Mayor for 2016 needs to set out their housing manifesto on day one.
Do you have any advice for people looking to buy or sell in the next few months?
Statistics show that traditionally in the run up to an election there is a ‘stand-off’ period and a ‘flurry’ afterwards. This relates only to activity levels however and does not impact on prices. My advice would be that if you are thinking of selling, forget the 7 May and go to market now. There may be less stock on and your property could do well in a less contested market.
If you are looking to buy then don’t worry, unless you have over £2m to spend. Think about where you are buying, and consider developments such as Crossrail and Crossrail 2. These will have a huge impact on infrastructure in certain areas, particularly east London, and buying in these areas is a smart move.
If you would like to discuss the market or your property needs with a member of our team, please contact one of our residential offices who will be happy to help. All our office contact details can be found here