With the general election just a few weeks away, there is an underlying uncertainty surrounding the UK’s political landscape.
And with the most recent poll unable to distinguish a clear victor, the general public is unsure who will in fact be in power come May.
This air of mystery has had a knock on effect on the UK’s property market, with many investors, first-time buyers and landlords are holding back from purchasing property until the outcome of the election is clear.
Moving forward, we ask, ‘Will the general election affect the UK’s property market?’
According to industry experts, it is not unusual for there to be an element of economic volatility after an election.
Many homeowners and investors will look to protect their assets, steering any investment decisions away from the risk of falls in values.
This point aside, new policies may also affect the market.
If Labour comes into power, the controversial mansion tax will be introduced which will mean that anyone owning a home worth over £2 million will pay a levy. This tax will no doubt have an effect on London’s property market, which may trigger a slowdown in the sector.
What’s more, cynics of the mansion tax have suggested that homeowners who dispute the valuation of their home could cost the tax payer more money. In this scenario, HMRC would have to cover the cost of the initial valuation and the revaluation. According to Savills, this could cost the tax payer up to £175 million.
Speaking to The Telegraph, Lucian Cook, director of residential research at Savills, commented:
“The valuation requirements and associated potential for dispute mean that a mansion tax would be particularly costly and complicated to administer, reducing its efficiency a revenue raiser for the Treasury.
“The potential costs borne by the tax payer will be a further concern to long term owners who are often asset rich but cash poor and for whom the tax itself is a significant concern,” Cook added.
For those looking to purchase or sell a property in this market, the uncertainty surrounding the election will understandably cause people to hold off until a final decision is made on which party – or parties – will run the country.
The uncertainty surrounding the election has had a positive effect on the UK’s rental sector. There has been an upward growth in the number of people heading to the private rented sector, instead of buying.
Come 7th May, the UK’s property market will no doubt have an unpredictable short-term future. Once leadership has been established, it will be interesting to see what will become the dominant market – the sales market of the private rented sector.