I was reading in the paper recently that while the General Election is still months away the effect of published Party policies is having an adverse effect on the Housing Market-the advice appears to be Sell Now.
So what are the issues? In no particular order they are
- Access to finance has and or will become more difficult. The Loan to value ratio may well be reduced this being in addition to the affordability test.
- At least two of the opposition parties are considering a “Mansion” tax payable annually for properties valued in excess of £2 Million pounds. This is in addition to the Stamp duty paid by the owners on purchase. This is likely to affect all areas of the country. It is probable that it will create a collapse in value of properties valued between the thresh hold of £2 Million and £3 Million pounds. Clearly once this part of the market collapses the rest will follow in a domino effect. It is likely to have an impact at least as bad as the 2009 crash but will inevitably be longer in duration.
- The Scots are going to introduce a Land and Buildings Tax to replace stamp duty however it is highly probable that the UK government will follow suit. This will increase the cost of buying properties adding substantially to the coffers of UK PLc. This Tax does not only affect the super rich but will also hit those families purchasing fairly modest homes.
- The uncertainty about Interest rate rises. The Bank of England flagged up that the current record low rates cannot continue indefinitely so a rise is imminent. Whether this will be before the Election or after is anybodies guess. As soon as the rates change buyers will be deterred from entering the market as homes will again become less affordable. It may well force others to the market to downsize or we will see an increase in repossessions. Either way the market will become unstable
- The Labour party has made it clear at their recent conference that they will be making it extremely difficult if not impossible for investors to remain in the Market as private Landlords forcing Councils to ban them from buying new homes to be let out. If this were to happen investment in the market will be choked off and there will be less property available for rental. In addition homes that may be appropriate for letting will become more difficult to sell.
So what of the future.Propbably may be wise to sell quickly if you are planning to do so in order that completion takes place at or shortly after the general election. If buying now may be a good time as there will be bargains available. Beware however value of properties go down as well as up carry out a full due dilligance research before entering this volatile market.
The message to the political elite. Stay out of any involvement in the Property Market as history shows clearly that interference always has unintended consequences. You need look no further back than the HIPs (Home Information Packs) fiasco to see such a thing. This was the start of the Property Crash in 2008 NOT the Banking Crisis in 2009