David Gilman is partner in charge of Blacks Connect
We are all now able to breathe a sigh of relief – the 2015 General Election campaign is officially over. As the final declaration was made in St. Ives on the afternoon of the 8th May – with the Conservatives taking another South West seat from the Liberal Democrats – you would be forgiven for hearing an audible collective intake of air from the population. This up and down, topsy-turvy Election had delivered its final result and it was a Conservative single-party majority few (if any) had predicted over the course of the last six months, let alone the last six weeks.
Where do you start in delivering a post-mortem so soon after David Cameron has been returned as Prime Minister? Perhaps it is best not to give it too much thought but instead reflect on a truly momentous night which, and this is a cliché which is actually true in this case, did change the political landscape of the country perhaps not just for the next five years but even further into the future. How many elections can account for the scalps of three opposition leaders within the space of one hour? How often will we see a Scotland almost completely shorn of any Labour MPs? How will a Conservative party now in total control move forward?
This last question is perhaps of most importance, particularly for the housing and mortgage markets because it seems quite obvious that other parties planned to be far more interventionist in these markets than the new Government had set out in its manifesto. For a start, we are currently looking at no Mansion Tax for £2m-plus homes, no rent controls on private rental properties, no three-year tenancy schemes, no banning of letting agent fees, the list goes on.
It was clear that the immediate reaction from the stock market was that estate agents, house builders and banks were likely to benefit from the result. This no doubt being based on a presumption that housing market activity was likely to bounce considerably off the back of a much less interventionist party now being in power.
There are of course other reasons why we might now see an improvement in activity – the Conservative’s own Right to Buy policy which will allow housing association tenants to purchase their properties, plus perhaps some pent-up demand from those who were holding back to find out the result of the election before they made their move. Certainly, a number of landlord surveys pre-election suggested that portfolio landlords had much less appetite to purchase until they were provided with more political certainty, and one would think they now have this.
There also appeared to be a great deal of jubilation around the prime London property market as fears of a Mansion Tax subsided. Again, with any major policy changes unknown until post 7th May you might suspect that both prospective purchasers of £2m-plus homes in particular might have been adopting a ‘wait and see’ approach.
Of course, you didn’t need to have been interested in multi-million pound homes in order to prefer to sit on your hands and one wonders what activity levels across the entire country will do during the Summer and into Autumn – a time of traditional activity for the housing market.
Apart from pushing out the Right to Buy opportunity to non-council tenants what else can we expect? Well, undoubtedly there is likely to be a renewed focus on delivering housing supply – pre-election the Conservative Party said it would make 200,000 new starter homes available to first-time buyers in England before 2020, this is on top of the 100,000 discounted homes it says will be available for those aged under 40. We will also have the launch of Help to Buy ISA in the Autumn, designed to help potential first-timers save for their deposits with the Government placing an extra £50 in the pot for every £200 saved per month.
What the result might bring about most though is confidence and certainty – the media were already speculating in the hours after the result that overseas investors were ‘flooding’ back into the London property market. The true extent of this remains to be seen. Certainly, one might anticipate a pick-up in overall activity – after a pull-back in the first few months of the year – and once again this could be a particularly good time to be an intermediary, with not just the mortgage opportunities but all the other needs that a client brings with them. I suspect that most would vote for five more years of that.