What does a Labour Government mean for the Luxury Homes Market?

On 4th July the UK public took to the polls. And, as was widely expected, Labour won by a comfortable margin.

Throughout this update, we’ll share with you what this means for the property market and, more specifically, the likely impact on the sale of your luxury home (whilst trying to remain politically neutral!).

Market Confidence

The result of the election has less influence on market confidence than the fact that the result is now decided. Removing uncertainty should restore confidence to a housing market that has been treading water for some time now.

Interest Rates

A critical catalyst to a strong property market is the current level of interest rates. When the Monetary Policy Committee meet on 1st August, the Labour party will be desperate to see the long-overdue rate reduction, and the housing market will get a [much-needed] boost from this.

House Prices

With a mixture of policy, confidence and interest rates, house prices are likely to continue to rise for the foreseeable. The Labour party has committed to offer mortgage guarantees for first-time buyers through its Freedom to Buy scheme. The experience from similar efforts by past governments suggests that such subsidies tend to increase asking prices, and we see this policy as having the same effect.

Labour also plans to require that 40% of all new developments are made up of lower-priced ‘affordable homes’. Large property developers have suggested that this wipes out any overall profit, potentially stalling large new housing developments and leading to an under-supply of properties, which again will put upward pressure on house prices.

Taxes

The Labour manifesto was noticeably silent on Capital Gains Tax and Lifetime Allowance (the amount you can build up in your pensions savings without incurring a tax charge). This suggests that neither measure will be off limits at Labour’s first budget event. If the new government decides to make changes to these tax rules, the fallout is likely to be that landlords with larger portfolios may wait to dispose of their assets until either a new government is in power or a new tax rule emerges. This would likely push house prices up.

The anticipated removal of VAT exemption from private schools is expected to have most impact in those areas of the UK that have Ofsted ‘outstanding’ state schools. Again, we expect to see property values rise in these areas as parents take their children out of private education and search for the highest-rated state education available.

What does all of this mean for you and the sale of your home?

Well, if you were thinking of moving estate agent – now is the time to do it. There will be a period coming when it should be a good time to have your property on the market. This period is probably that following the reduction in base rate, hopefully on 1st August.

So – be ready.

This means your photography, styling, description, floorplan, brochure and online listing all looking at their very best.

If they’re not, it might be time for us to chat?

Give us a call on 07778 090 873 or drop us a line with your address and some dates and times which suit to [email protected].

~ Grace