Navigating the UK General Election as a Property Investor

The UK General Election is taking place on July 4th 2024 - significantly earlier than we were expecting. But what does this mean for property investors? The property market has been relatively stable for the last few months, but this could be impacted by the result of the election. The UK government might undergo significant changes and these could have major implications for the property market.

The House Price Index indicated that they don’t predict the General Election, due to take place on July 4th, will have a significant impact on the property sales market. Their reasoning behind this prediction is the lack of differences in housing-related policies between the two major competing parties - Labour and the Conservatives. But, in this blog, we'll take a look at this in more depth and examine how the upcoming election might affect property investors and offer advice on how to work through this period of change.

The Potential Outcomes

The UK General Election has a few potential outcomes, each bringing different implications for the property market. It is worth noting that only the Conservative and Labour Party manifestos are checked to ensure that they can finance the promises being made. The other parties do not have to go through the same rigorous checks and can be why some of their promises seem a little overzealous!

Conservative Party

The Conservatives are proposing to amend current property taxation to promote investment and development, while increasing the number of affordable homes on the market. They also intend to support the private housing sector by simplifying the planning process and they may support property investors through tax reliefs. Their manifesto focuses on keeping the current market stability and empowering more people to own homes.

Labour Party

The Labour Party are aiming to tackle the widespread housing crisis in the UK by focusing on interventionist policies geared towards social housing and protecting tenants. This could include things such as rent controls and a reformation of property taxes, including higher taxes on high-value and second properties. This could lead to lower rental income, but presents opportunities to invest in redevelopments. There is also a suggestion that they will bring the minimum EPC requirements back into play which could cause further havoc on the property investment market and reduce the number of homes on the rental market further, where they cannot be upgraded to the minimum grade, landlords will likely choose to sell them back into the owner occupier market. We believe that if such a regulation is brought in there will be grants made available to help ensure that the rental market doesn’t shrink too much further or that the previously required ‘C’ grade will be reduced - at least initially.

Liberal Democrats

The Liberal Democrats' policies emphasise sustainable housing. This could lead to stricter environmental regulations for new developments, ensuring building works are more energy efficient. They also aim to reform council tax, replacing it with a land value tax. Overall they aim to make homeownership more affordable. However, they have promised to build the most amount of properties by any party and as the country has struggled to build anywhere near this amount for decades it is hard to see this coming to fruition.

The Green Party

The Green Party's main focus is sustainability, so their policies are also likely to lead to stricter environmental regulations. This could bring ample opportunities for investors and developers who are keen on implementing green building standards. These do come at a cost, but as previously indicated, buyers and tenants are shown to be willing to pay more for environmentally friendly homes. The Green Party also aims to increase affordability of housing.

The Impact on Property Investors

Market Stability

Upcoming political changes can lead to fluctuations in the stability of the property market. We may see some changes in the lead-up and aftermath of the election as buyers rush through sales currently in the pipeline, while others hold off until autumn to buy or sell. This may also impact investors who choose to act quickly in reaction to the potential policy changes.

Interest Rates and Lending

The election outcome will influence economic policies, which in turn affect interest rates and lending conditions. Lending conditions have been relatively stable for the last quarter and a Conservative win might mean a continuation of this, while a Labour, Liberal Democrat, or Green Party win could bring economic changes, affecting mortgage rates and lending conditions. With this new earlier date for the election we do not predict a change in BOE base rate at the next vote.

House Prices

Similar to interest rates, a Conservative victory could mean the market continues to stay at its current level of stability, but a win for another party could bring changes. Labour aims to decrease property prices with their focus on affordable housing and the Liberal Democrats and Greens' sustainability priorities would also have an impact on average market rates.

Taxation

Changes in property taxation are going to be happening regardless of the outcome on 4th July, Lib Dems seem to be broaching large amounts of money being found through tax to support their promises. Generally speaking Labour will tax landlords and business owners more so than Conservatives but be prepared for tax changes. Depending on your business and strategy they could be overall positive or negative for you but in time they will shift the other way again.

Rightmove’s Government Priorities

While the main political parties have already set out some property market-related policies, Rightmove did some research into what home-movers would like to see the government focus on as we move towards July 4th, in the hopes that the victorious government will take buyers’ needs into account.

The 4 key priorities they identified in their research are:

• Speeding up house-building and more first-time buyer support, including the development of more new homes to meet buyer demand and more long-term support for first-time buyers.

• Stamp duty changes, starting with the permanent implementation of the current stamp duty relief on properties up to ￡425,000, but ideally leading to a complete reform.

• Incentives to help people make their homes greener, as currently cost is a major barrier despite a large percentage of homeowners having a desire to live more sustainably.

• Simplifying and speeding up the home-buying process, as the current average sales time of 7 months is leading to a lack of buyer/seller confidence and lengthy, drawn-out processes.

It will be interesting to see whether any of the political parties take this research into account before and after the election, so ensure you continue to stay up to date with the latest policy news.

How Investors Should Respond

Stay Informed

Make sure you continue to keep a close eye on political developments and policy proposals from all major political parties. Ensuring you understand their positions on housing and taxation will help you anticipate changes, so you can act strategically when the moment is right.

Review Portfolios

It may be a good time to consider the diversity of your property portfolio to mitigate risks in case of policies affecting a specific property type. A mix of investments in different property types, from SA to HMOs and even to commercial properties can provide a buffer against any sudden market-specific changes.

Financial Planning

Ensure you have adequate cash reserves to handle potential short-term changes and potential volatility. Whether this includes a cap on private rent rates or a sudden need to implement sustainable changes in your properties, having the cash readily available will help you avoid the need to sell assets during any uncertain times.

Engage with Experts

Consult with property investment advisors like us here at REALM 47. We can provide tailored advice and guidance based on your unique property portfolio.

Final Words

The upcoming UK General Election could present both challenges and opportunities for property investors, in the short-term and the long-term.

By staying informed, being prepared to adapt and seeking professional advice, investors can navigate this period of uncertainty and position themselves for success regardless of the election outcome.

What we are still seeing is a strong property market across the residential and investment markets so confidence remains high and as a property investor one of your key attributes must be the ability to adapt as the market place is constantly changing.

At REALM 47 we're here to help you make informed, strategic decisions. Contact us today to learn more about how we can support you through this pivotal time.