How would a Labour party victory in the General Election impact the property market?
A win for the Labour party in the
General Election could spell trouble for first-time buyers, and
their proposed mansion tax could have a knock-on effect on the whole
market.
House prices have grown by an average of 11 per cent under the current Government - the equivalent of £26,372 per annum - and the average UK home value now stands at £264,934, according to research by Zoopla.
House prices have grown by an average of 11 per cent under the current Government - the equivalent of £26,372 per annum - and the average UK home value now stands at £264,934, according to research by Zoopla.
Initiatives such as planning reforms, various Help to Buy
schemes, Funding for Lending and an extensive Stamp Duty overhaul have
aided in the recovery of the British housing market, but these gains
could be reversed by a Labour government.
Ed Miliband has revealed plans to restrict banks and buildings societies that accept deposits under the new Help to Buy Isa scheme
and dictate how they lend these funds, which could lead to some banks
pulling out of the Help to Buy ISA scheme altogether. This could limit
the support offered to aspiring first-time buyers, and eventually kill
off the initiative.
Additionally, the party’s proposed mansion tax will likely have significant consequential effects on the entire housing market, not just those properties valued at more than £2m.
The side-effects of the tax would include a reduction of prices at the top end of the market, as well as deterring foreign investment and driving increased competition for middle-class families below the threshold where there is already a shortage of stock.
Responding to the Labour manifesto, Lawrence Hall of Zoopla, said: “It seems likely that a Miliband win in May would have a negative impact on the UK housing market in the short to medium term.
“The Tories have paved the way for considerable strides in the property recovery, but the Labour proposals for a punitive tax on homes and restrictions on some of the first-time buyer support systems would create uncertainty and could well pull the rug out from under the feet of recovery and dampen market confidence.”
Additionally, the party’s proposed mansion tax will likely have significant consequential effects on the entire housing market, not just those properties valued at more than £2m.
The side-effects of the tax would include a reduction of prices at the top end of the market, as well as deterring foreign investment and driving increased competition for middle-class families below the threshold where there is already a shortage of stock.
Responding to the Labour manifesto, Lawrence Hall of Zoopla, said: “It seems likely that a Miliband win in May would have a negative impact on the UK housing market in the short to medium term.
“The Tories have paved the way for considerable strides in the property recovery, but the Labour proposals for a punitive tax on homes and restrictions on some of the first-time buyer support systems would create uncertainty and could well pull the rug out from under the feet of recovery and dampen market confidence.”
As a result of undoing some of the recent initiatives,
there could be a fall in demand in property, which alongside an increase
in supply from those fearing increased property taxes could lead to a
potential sharp decline in house prices.
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