As an unexpected general election looms for the already politically beleaguered public on June 8, the UK property market is thrown into yet another period of uncertainty. This never bodes well for house transactions, of course, but could the long-term outlook prove more favourable than it did prior to Teresa May’s announcement on Tuesday?
The good news is that the period of uncertainty – and sluggish house sales – always triggered by an election, is relatively short; a mere seven weeks compared to the usual six month run-up to voting. And presumably sales will increase in the months after the election as confidence returns and the economic situation quietens down.
Also, many within the property industry believe the hit to ongoing sales will be minimal since those who intended to sell or buy will continue to go ahead regardless, and that only those who were in two-minds about whether or not to move would wait for the results of the election.
This was a notion backed up in an online survey by eMoov who found that 56.7 per cent of respondents said the forthcoming election would have no effect on their decision to sell while 59.2 per cent of buyers confirmed they would continue with their property purchase.
Market could benefit from the prospect of more long-term stability
The uncertainty is also likely to be curtailed with the expected Tory landslide the results are predicted to bring, and the prospect of five years of stability under a Conservative government.
Certainly the financial markets reacted to the news on a positive note. After the PM’s announcement the pound surged to a two-month-high against the dollar –the biggest jump since December 13 and the best 24 hour period for sterling in months.
Melanie Leech of the British Property Federation concedes news of the election will create a dip in property buying and selling but predicts the long-term consequences of the government having a clear mandate to go ahead with its EU negotiations, can only go in the property market’s favour – and that of the UK economy as a whole.
Teresa May herself announced the reason she had decided to hold the snap general election was to ensure she wasn’t hindered when it came to negotiating the best deal possible for the UK with Europe. It was, she said, the only way she could “guarantee certainty and security for years ahead.’
Another plus is that it gives a clear five year run of government without the complication of another general election close to the triggering of Article 50 in two years time.
A possible end to restrictive planning policy in the housing market
Some of the larger residential property investment firms believe an outright Conservative win and a better negotiating position with Europe could benefit the property market by helping to remove the red tape which has for years been clogging up the planning agenda.
This was echoed by RICS. It’s parliamentary and public affairs manager Lewis Johnston said he saw an opportunity for the UK to finally get its house in order regarding the critical shortage of homes.
He said: “It is now the responsibility of all parties to set out clear policy proposals across land, property, construction and infrastructure to ensure the UK can deliver the homes, infrastructure, factories, offices and major building projects it needs to thrive.”
The construction industry is less optimistic however, insisting that the government must take into consideration the negative impact Brexit will have on European workers within the sector.
CAST’s chief executive Mark Farmer was particularly vocal, for instance, saying he wanted to see “serious solutions” to the potential problem and “manifestos that adequately reflect the importance of the construction industry’s welfare and future modernisation as part of its contribution to UK plc.”
A need for landlord tax-breaks for long-term tenancies
Geeta Nanda, chief executive of Thames Valley Housing said she wanted a new manifesto pledge which would reward buy to let investors with tax breaks for buy to let landlords who were prepared to provide long and stable tenancies. A move, she said, which would result in a win-win situation both for the tenant and their landlord.
Of course, there’s no guarantee that Teresa May’s decision will pay off and that the result will produce a Conservative win for – as we all we all know from recent activity – stranger things have definitely happened in politics.
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