What does the 2019 election mean for the UK housing market?
With the Conservatives now enjoying a landslide majority in Parliament, the Prime Minister, Boris Johnson, is expected to deliver Brexit on January 31st 2020.
Prior to the election, uncertainty over when and how the UK would have left the European Union, caused the housing market to stall. Many people, whether buyers, sellers or landlords, decided to put decisions on hold until after the outlook became clearer.
How will the election result affect house prices?
In the run-up to the 2019 UK General Election, demand in the housing market was sluggish and there was a lot of uncertainty. The large Tory majority has changed that. For buyers and sellers of property, the result should unlock deals which may have been put on hold. Prospective buyers are likely to be more committed, bringing a greater sense of urgency to the housing market.
With Brexit finally going to happen, many experts are now predicting a significant increase in house prices. Reports have suggested that over the next ten years, property prices in the UK could rise as much as 26%. This is welcome news to current landlords as well as investors who could potentially look forward to healthy capital growth.
Help for first-time buyers
The Conservatives have pledged a number of proposals to help first-time buyers get onto the property ladder. The proposals include:-
- A First Home Scheme – first-time buyers will be offered a 30% discount on new homes in their local area.
- “Life Time” fixed-rate mortgages – this type of mortgage will only require a 5% deposit.
For hopeful, first time buyers, homeowners with a mortgage and landlords, there is unlikely to be a rise in interest rates, certainly in 2020. The current Bank of England base rate stands at 0.75%, an historically low figure.
The base rate is predicted to remain low for some time yet. There are plenty of good mortgage deals out there, so it’s a “win-win” situation for buyers and investors alike.
Less foreign buyers
As a result of the 2019 General Election, the UK’s property market is less likely to look appealing to foreign buyers. Sterling has increased by more than 2% against the US dollar reversing some of the falls seen in the aftermath of the referendum.
The Tory’s election manifesto said it would introduce a 3% stamp duty surcharge for overseas buyers. However, it’s not yet clear when this will take place.
Other Conservative pledges on housing include:-
- Renewing the affordable house programme to support the construction and delivery of hundreds of thousands of affordable homes across the UK.
- Maintaining “Right to Buy” for all council tenants as well as the “Voluntary Right to Buy” schemes agreed with Housing Associations.
- A commitment to introduce Lifetime Rental Deposits to help tenants reduce the cost of moving.
After the 2019 General Election result, confidence in the UK housing market is now very positive. Expect to see a greater sense of urgency from buyers and sellers after years of stagnation.