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Election 2010: Property Special
15Apr2010
Nick Churton of Bell Ingram’s Mayfair Office considers some key areas of the property market for the year ahead - regardless of which party wins the General Election.
Over the years we have seen a slight lull in market activity in the lead up to a general election and this one appears to be no different. But whoever wins the election it is hard to see how any one of the parties will have more of an impact on the market than another. Despite the deafening silence from all political parties on the need for higher taxes we all seem to be resigned to rising costs and this will inevitably have some impact over the next few years. But mortgage borrowing is getting easier, and for those on the move there are some pre and post election points to bear in mind in all price ranges:
First Time Buyers
Buyers in the more costly parts of the country will now benefit from the £250,000 stamp duty holiday that came into effect after the last Budget. However their ability to capitalise on this relief will, to some extent, lie in the hands of the lenders. Harsh lending restrictions will have to be relaxed still further for there to be across-the-board benefit. Also, the First Time Buyer appellation does not extend to couples where one party has previously owned property. The government suggests that nine out of ten first time buyers will benefit from this move, but estate agents mainly disagree with this figure as so many buyers in the lower-end of the market now result from distressed financial circumstances following the recession or broken personal relationships. All-in-all, with interest rates still at their lowest for decades, it is a good time to be making that first move.Middle incomers
For middle-incomers the jury is out. Will there be a trend to stay put or to downsize in anticipation of greater taxes, higher interest rates and increasing living and education costs over the next few years? Or will members of this group move across market into more fuel-efficient eco-friendly homes or into suitable state school catchment areas? Will there be a backlash against ever-rising council tax bills and therefore a move into cheaper areas? Whether buyers move up or down market there will be movement boosted by first time buyers setting up a chain reaction.The £1 Million Club
Those that want to move into the £1m+ Club should clearly do so before April 2011 when the 5% Stamp Duty levy comes into effect. There will be some regional exceptions, although overall prices could remain relatively static over the next year within this sector. Expect some last minute price reductions next year before the Stamp Duty rise as many more homes are priced just under the £1 Million mark. This will offer some fine opportunities for those skilled at brinkmanship, however the cost of missing a completion deadline could be high.Retirees
With an ageing population this group can only grow ever larger. Watch out for developers creating more homes geared to active retirees who will be downsizing from larger family homes in order to release capital. But what will the market for selling be like for these newly retired? With rising interest rates, younger middle-incomers could become nervous about over stretching themselves with big mortgages, especially in the precarious career environment of today. Their world is very different from many fortunate parents who rode the wave of post-war prosperity; a job for life, a well-funded welfare state and index-linked final salary pension. Will this have an impact on prices in the middle market? Last year’s surprising lift in prices was largely down to a lack of stock. How will the market react to greater inventory? Some suspect this could be the dreaded second bounce, if so there will be some excellent opportunities for buyers.Home Information Packs / Home Reports
Perhaps one area of the market that may well be changed following the election is Home Information Packs - the Tories have pledged to abolish them. This largely ridiculous piece of costly and ineffective legislation has few supporters, however abolition is not expected immediately as the Conservatives may look at a voluntary arrangement that rescues the few effective time-saving parts of home packs/reports that do work, namely title and local searches. But above all abolition would end, what is in effect, government permission to put one’s property on the market and paying an extra tax to do so. Few will mourn the end of HIPs/Home Reports if it comes.Overall there is now much more property on the market than last year and many more buyers – or at least, lookers. This suggests that, for a while, we may see a level market with prices steady and neither buyers nor sellers having a clear advantage. This points strongly to a bottoming out of this property market cycle and from there, regardless of which party is in power, the inevitable way is up!