One month on how has the Election affected the London Property Market
Monday, June 08, 2015 by
One month ago today many were shaking their head in disbelief at the Election result and expectation levels rose, so what’s changed for the London Property Market.
Well, apart from a few happy people who actually exchanged on deals that were subject to political uncertainty it would seem as if not a lot has changed in the immediate aftermath.
The pressure the Treasury has been putting on the sector, squeezing every last penny in what’s seemed like an ever increasing vise, seems to be taking its toll with previously successful top end estate agents now going into liquidation and the number of deals continuing to fall. Politicians are masters of burying bad news and in the run up to the Election Stamp Duty Land Tax talk was buried amidst Mansion Tax concerns. The fact is though that since 1997 the tax, which was collected on the whole value of your purchase, has inexorably risen from 1% to where it is now. Due to the relatively small number of big transactions, apparently there have been c.1150 sales recorded by the Land Registry at over £5m in the ten years to 2014, politically there’s been little risk of voter fall out – you’d think anyone living in such a property would be a natural Tory voter.
Slipping in under the Mansion Tax wire though the changes in last year’s Autumn Statement were trumpeted as doing away with the slab system, benefitting 98% of the population, but for those seeking their dream Chelsea home the effective rate of SDLT is now 12%. So for those worrying about volumes in London continuing to fall I’d say they’re right.
Values, far more likely to catch the journalist’s eye, would seem set fair to rocket at some point for exactly the same reason they always have – lack of supply, sadly it seems that this more brittle driver of values is going to continue to set the tone.
Those mortals who operate in more normal price ranges have potentially benefitted from Autumn Statement SDLT changes but the immediate post-Election head scratching has led to this market also not yet fulfilling its potential. If you were selling your property amid negative property news pre-Election what’s your likely reaction to the news that the Tories had won. Most seem to have had the feeling, and I suspect they’ll be right if you look a year ahead, that values are going to go up - so they want to wait. This is not new but a curious form of blindness creeps in at this stage. Most sellers sell in order to stretch to buy a bigger property. If you wait for values to go up, a natural inclination I accept, does it not make sense that the bigger property you’re looking to buy is also going to go up, probably by a larger capital sum meaning that procrastination in a rising market usually means you’ll lose out.
So one month on the jury is still out, let’s talk again after the latest Budget on July 8th.