An almost audible sigh of relief was heard across London last Friday, 8th May 2015, as the results of the UK general elections emerged.
“After the prolonged uncertainty in the London property market over the last two quarters, with polar opposite approaches adopted by the Conservatives and Labour towards this hot political issue, a Conservative majority win is very comforting”, commented Caroline Takla, Founder & Managing Partner of leading London property consultancy The Collection LLP.
The Conservatives will help the UK sustain its current economic growth, underpinned by a thriving London property market, through the below factors:
- Guarantee of no additional property taxes: Labour’s proposed mansion tax would have been a tax too many for the London property market, following the significant tax changes over the last two years.
- Safe guarding of non-domicile tax exemption: Labour’s plans to abolish this exemption could have had two consequences; firstly, resident non-domiciled property investors could have moved to different destinations, impacting the sales market, and secondly, the rental market would have also been adversely affected as a vast majority of resident non-domiciled inhabitants opt to rent.
- Natural market dynamics for the rental market: Labour’s proposal to introduce a 3-year cap on rent could have resulted in a reduction of supplied properties, as landlord returns diminish over the 3-year period, in turn raising rental prices. With a supply crisis already rampant and property inflation spiralling, this would have had immense negative consequences on the market.
- Reinforcement of Right-to-Buy and Help-to-Buy schemes: The Conservatives will help 1.3 million families get onto the property ladder. Currently, it is estimated that around 4 million people who rent their accommodation cannot afford to buy it.
Caroline concludes “It was important that the UK elects a government that would strike a balance between fair taxation and encourage inward investment. We know many people were delaying their decision to invest in London until after the elections, and look forward to renewed interest from potential buyers now that the uncertainty has been settled.”