Following Boris Johnson’s meeting with Queen Elizabeth II, where she granted him permission to form a government, the prime minister will now begin the process of announcing its new cabinet members.
Mr Johnson will then start to unveil his priorities for government. This includes Brexit, with a fresh vote in Parliament on the Withdrawal Agreement struck between Mr Johnson and the European Union (EU) in October expected as early as Friday 20th December.
Where does Mr Johnson stand on housing and property?
To recap, the Conservative party pledged the following in their election manifesto:
To deliver one million new homes over the next five years
They also aimed to be building 300,000 new homes by the mid-2020’s
Abolish “no fault evictions” and introduce a new “lifetime deposit, which would move with tenants as they change homes in the private rented sector
Introduce a 3% increase in stamp duty for non-UK residents buying property
So, what does this mean?
As we outlined in our election preview, it is important to remember that manifesto pledges are exactly that – pledges. While it is likely that many manifesto promises will be kept, there is no guarantee the government will act on every single pledge made.
The current UK housebuilding target, set out by the last Conservative government, was 300,000 per year, meaning that their newly proposed target is actually the same one they’ve been already been trying to achieve.
Estimates, as published in a House of Commons briefing paper from December 2018, suggest that in England alone right now, as many as 340,000 new homes are needed each year, underlining the huge undersupply of property in the UK.
In terms of the private rented sector, the UK government is keen to increase management standards for tenants renting property in Britain. Reforms, such as the “lifetime deposit” pledge proposed, is just another example of this. As Mr Johnson’s new government continues to professionalise the private rented sector, investors such continue to focus on rental property brands that can deliver the level of quality now demanded by operators in the sector.
Finally, what about the proposed 3% increase in stamp duty for non-UK residents? Well investors should remember that a 1% stamp duty surcharge was being consulted on as recently as Q1 2019, but it wasn’t brought into effect.
Even if this new increase is introduced, it is likely to only continue the growing focus for investors away from the high prices of London and to property in key regional cities such as Manchester, where affordability is greater, and yields are typically higher.
What about Brexit?
This was undoubtedly the topic the Conservative party campaigned about the most during the general election.
‘Get Brexit done’ was the party’s main slogan. In effect, Mr Johnson hopes that, with a large majority in Parliament, he can now finally deliver the result of the 2016 EU referendum and take the UK out of the European Union by the current deadline of 31st January 2020.
In short, its now unlikely that the UK will hold another referendum on EU membership.
Mr Johnson will now bring back the Withdrawal Agreement he struck with the EU in October to Parliament before the end of the year. Should this get approved by MPs, this will see the UK leave the EU either on, or before, the 31st January 2020, with a ‘transition’ period then set to last until 31st December 2020.
During this transition period, the UK and EU will set out its future trading relationship together. Once this transition period ends, the UK be then be independent from the EU.
What else to look out for?
One of the biggest shocks of the general election was how the Conservatives performed in the north of England. Many constituencies across the region regarded as ‘safe seats’ for the Labour party were won by the Conservatives for the very first time.
In his victory speech, Mr Johnson was quick to acknowledge the “trust” put into the Conservatives by voters in the north of England.
Therefore, many political commentators have begun to speculate whether the government will now look to increase public spending on key economic projects in the region. This might include new investment in public transport, as well as more support for the “Northern Powerhouse” project.
For property investors in cities such as Manchester, more economic investment from the government in the region would be a hugely positive development.
So, is now the best time to invest in UK property?
Even before the election, it was still a good time to invest in the UK property sector!
Given the UK’s critical undersupply of property, coupled with the asset’s famed resilience to external political developments, investors in key cities were continuing to enjoy high growth from their investments, regardless of the general election.
However, any investor that may have been waiting until after the election should now move forward with confidence.
A majority government now means more decisions can be made in Parliament. A clearer picture about the timetable of Brexit has now emerged. Crucially, none of the manifesto pledges put forward by the Conservative party are likely to fundamentally change the framework of the UK property market.
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