Will The 2015 Election Affect Property Investors?
How Will the Results of the Election Affect Property Investors?
The uncertainty over who would win the General Election resulted in a lot of speculation in the property investment sector.
In their respective manifestos the main parties had each made a range of pledges relating to the property sector and rental property in particular. We take a look at what the implications of the result will have on property investors.
One of the main issues that has had investors worried in recent months, has been the potential tax implications which could come with new administration. However, now that the Conservatives have managed to gain a majority vote, it has provided a much needed boost to property investors. So how will a conservative government benefit the property industry?
Say goodbye to Mansion Tax
The uncertainty of this year’s election caused house prices in prime London areas to drop by 0.5%. Stamp duty has played a large part in the drop, along with the fear of increased taxes being placed upon property after the election. However, now the Conservatives have won the vote, there has been a surge in International Investors looking to get back onto the UK’s property market.
While Prime Minister David Cameron does agree that council tax and stamp duty are acceptable, he has previously expressed his desire to eliminate Mansion Tax. As reported by The Telegraph, in 2013 while speaking on the BBC’s Andrew Marr show, Mr Cameron insisted that his government would not punish those who generated wealth. He stated: “I think wealth tax is not sensible for a country that wants to attract wealth creation, wants to reward saving and people who work hard and do the right thing.” He also went on to say if he was elected in 2015, Mansion Tax wouldn’t be introduced. Estate agents have already started to receive interest from high-end property investors who are rejoicing now they won’t have to pay Mansion Tax on homes valued at over £2 million.
First time investors also set to benefit
Another promise made by Mr Cameron is to have an additional 200,000 starter homes built by 2020. They will also be constructing additional garden cities along with an extra 400,000 units created from brownfield land. The opportunity for investment is rife and the proposed 20% discount on the additional starter homes for first time buyers is set to encourage younger people onto the property ladder. Whilst not all of them will be interested in property investment, it will certainly entice young buy to let investors interested in getting into the property investment sector.
No Rent Cap brings welcome relief
Rental caps have been a pretty hot topic over the course of the election. The labour party was a particular fan of introducing a cap on rent. However, not everybody welcomed this potential cap, including property investors.
If the cap was put in place, it would deter investors from buying properties to let. It would even have likely caused some investors to sell their existing properties. This would in turn lead to a crash in the number of rental homes available. This would be detrimental to the UK’s housing market as private renting has increased by a dramatic 1.2 million since 2009. Over the same period, the number of homeowners seeking mortgages has declined by almost 800,000.
While some argue the cap on rents would have benefitted the sector, it is no doubt welcome news for property investors that it won’t be going ahead.
10,000 Additional homes to be introduced into the private rented sector
While rental properties haven’t played a huge part in the Conservative’s election campaign, they have stated they aim to provide 10,000 additional houses into the private rented sector.
Could house prices be pushed up?
The Conservative’s victory has mostly benefited the property investment sector, but there is one potential worry investors have. Now that Mansion Tax and rental caps won’t be an issue, there is a fear that house prices will rise further. This has caused many investors to try rush through their applications so they can avoid any potential increase. There is certainly the chance that house prices could shoot up; especially over the next few months.
If you are a property investor, the result of the 2015 election is definitely welcome news. Could this be the year that the housing market starts to properly recover? Only time will tell but the Conservatives have made some interesting promises that will attract both international and national investors.