House of Commons vs Housing Market - the next five years

Following a Conservative victory in last week's General Election, the industry has largely welcomed the "end of months of uncertainty" in the housing market.

Related topics:  Special Features
Rozi Jones
11th May 2015
Election

While some voiced concerns over an EU referendum and Scottish independence, others hailed the continuation of the Help to Buy scheme and the lack of new regulation in the private rental sector that a Conservative government is likely to bring.

Rob Jupp, CEO of Brightstar, noted that "the markets reacted positively from the moment that the exit polls were announced at 10pm with sterling up 2% against both the dollar and the euro." He added that an outright majority will provide political certainty which will be positive for the housing market and for financial services. He also backed the continuation of the Help to Buy scheme which he argued "will be a real help for First time buyers and those on the lower end of the property ladder."

Bob Young, Chief Executive Officer of Fleet Mortgages, added:
 
“There are clearly a number of positives for the housing and mortgage market from this Conservative Party victory, not least the fact that the Tories tend to be far less interventionist than the Labour Party which means they are unlikely to meddle in the housing market, particularly the private rental sector.

"We are all acutely aware of the overwhelming need to build more houses in the UK however the problem may be a lack of materials and manpower – many thousands of construction workers exited the industry back in 2008 and haven’t been replaced. Therefore the promises of more housing supply, especially those made by the Labour Party during the campaign, were simply not achievable."

Richard Pike, Sales and Marketing Director at Phoebus Software, said that the localisation of planning and tax incentives for building on brownfield land is an important Conservative policy. He added that he hopes to see “central government matching local taxes received from new builds to invest in local services and amenities and a more empowered ‘local community’ approach to the planning and building of new residential developments, therefore gaining more on-mass buy in by the community.”

Others pointed out the importance of a Conservative government with regards to overseas investors. Jonathan Adams, director of prime central London estate agency Napier Watt, noted concerns that wealthy overseas investors had threatened to boycott the London market if Labour were elected.

He said:
 
“Foreign nationals were particularly concerned about a mansion tax on top of recent tax changes, including an annual charge on property owned via a company and capital gains tax on its disposal. But now there is no chance of a mansion tax, no changes to non-dom status and no additional stamp duty costs. This is all excellent news, and will be hugely beneficial to the upper end of the property market in particular.
 
“We expect the property market, which has been rather subdued of late as buyers and sellers adopted a ‘wait and see’ attitude, to now pick up.’ Many people have been holding off making a decision because of the uncertainty, and as we would always expect May, June and July to be our best months with foreign buyers from overseas, we are all set for a busy summer.”

However other argued that despite those at the top end of the property market breathing a sigh of relief having avoided a hefty Mansion Tax, there won’t be “huge implications at the other end of the market”.

Founder and CEO of eMoov.co.uk, Russell Quirk, added:

“Having secured the popular vote and enough to form a majority government, the Conservatives now have to walk the walk they have talked so fiercely about over the last few months.

“One hopes that the election bribes orchestrated by the Conservatives will actually be promises that are kept. Based upon the rhetoric from previous campaigns versus the elected reality, I doubt that the pledges will be matched by the outcome regardless of who has now formed the government.

“If they are to really help the housing market they need to deliver on the regenerating of brownfield land to facilitate the construction of the 400,000 new homes. Under the last government there was a woefully inadequate shortfall of around 70-80,000 homes a year and this can’t continue.”

David Copland, director of TMA, agreed, stating that the real challenge is building more homes. He asked, ‘how is the new government going to help the industry build the 200,000 new homes we need a year to keep up with the current demand?’.
 
He added that he would like to see a concerted plan on how the Help to Buy initiatives that the coalition introduced are going to be replaced, if at all.

Ian Whittock, CIO, Knight Frank Investment Management, asked:

“What are the implications of the overwhelming nationalist victory in Scotland? What about the possibility of a British exit following the Conservative pledge to hold a referendum on EU membership in 2017?

“In reality it is possible that the Conservative victory may well embolden the Eurosceptics in the Conservative party, especially as the virulently anti-Europe UKIP is now the third largest party in the UK (by number of voters). An exit from Europe may have implications not only for the value of Sterling but also on inward investment; which could in turn affect commercial property values given the extent of overseas investment in the UK property market.

“From our perspective, whilst the election has removed one set of short term uncertainties, it has replaced them with an alternative set of medium term uncertainties which are arguably more fundamental in terms of their potential impact on the UK property market.”

The promise of an EU referendum seems to be an ongoing concern for the industry, with both Rob Jupp and David Lamb, head of dealing at forex specialists FEXCO, describing the Conservative pledge as “a longer-term source of concern”.

Although it is clear that the housing market will be a top priority for the new government, whether the Conservatives can stick to their promises will remain to be seen.

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