As the nation gears up for the General Election on July 4, the property market is bracing for potential shifts. Prime Minister Rishi Sunak’s announcement has left buyers and sellers speculating about the future housing policies of the next government. However, according to Savills, a leading real estate advisor, the affordability of homes is proving to be a more decisive factor for buyers than the election itself.
Lucian Cook, Savills’ Head of Residential Research, highlighted that interest rate trends are likely to have a more profound impact on the housing market than the political climate. “The fall of headline inflation to 2.3% in April suggests we could see two or three base rate cuts this year,” Cook stated. “This would likely stabilize the mortgage market in the short term, with the prospect of lower borrowing costs as the year progresses.”
Cook pointed out that the brief run-up to the general election could allow buyer demand to gain momentum in the autumn, once election uncertainties are resolved. “Our March client survey indicated that 79% of respondents in the prime property sector were unfazed by the upcoming election in terms of their commitment to move within the next year,” he added.
For prime property buyers, the focus is shifting towards potential changes in taxation. Despite the looming possibility of higher taxes, such as VAT on private school fees and measures targeting overseas buyers, Cook noted that wealthy domestic buyers seem prepared for these adjustments. “The prospect of a government change is largely anticipated in the prime market,” he said, pointing out the absence of aggressive wealth tax proposals akin to the mansion tax discussions of the early 2010s.
However, Cook warned of potential disruptions in the prime central London market, particularly concerning the tax treatment of non-domiciled residents. “This could cause increased price sensitivity and hinder a much-needed recovery in the market,” he said.
Beyond the prime sector, a change in government is unlikely to significantly alter the macro-economic landscape in the near term. However, Cook observed that Labour’s ambitious plan to deliver 1.5 million homes over the next five years could reshape the housing landscape over time, though its immediate impact remains uncertain.
In the legislative arena, there are growing concerns about the fate of property-focused reforms. Paula Higgins, Chief Executive of the HomeOwners Alliance, urged the government to expedite leasehold reform legislation. “This is a critical issue affecting current and prospective flat owners,” Higgins said. “The bill could have a tangible impact on buyers and leaseholders, who need clarity on the costs of extending their leases.”
As the election date approaches, the property market watches closely, balancing the immediate influence of economic factors against the longer-term implications of potential political changes.