The UK housing market could be heavily affected should Labour win the election as they plan to reduce the number of homes supplied whilst also making it difficult for overseas investors to invest in London. 66% of landlords will leave the private rented sector should labour win and introduce a rent control policy which puts a cap on the amount of affordable rental properties.
Social sector rents rose by 25% between 2008 and 2009, and 2012 and 2013 and private sector rents increased by 6.5%. There is a belief that should the rental controls be introduced tenants will be given less of a choice which means there will be a reduction in supply but also the opportunity for dubious landlords to enter the market.
There have also been rumours of a return of the 50p tax rate which means that London could no longer compete with the big cities around the world. This means that wealthy individuals interested in UK property investment will decide that they want to live somewhere else in Europe.
A mansion tax could also be introduced which could cripple the London property market as there are around 97,000 properties valued at more than £2 million. This tax on assets will really rock many areas in London and it will result in pushing many people away form the capital as they will look to invest elsewhere, this will effectively result in house prices in London decreasing as buyers and sellers negotiate. It will be the straw that breaks the camels back, especially when the overhaul of stamp duty is taken into consideration for this small percentage of property owners.
There is belief that the imbalance in supply and demand is causing prices in mainstream housing to increase but overseas buyers are not increasing. However, there has been no collaboration between Labour or Conservative governments and housebuilder since 1986, to put in place a plan to increase the number of properties available.
A housing study carried by Labour comes with a ‘Use it or Lose it’ warning that promotes and encourages the redevelopment of buildings that are derelict or landholdings that have been granted planning permission to build new homes but the land owner has still not implemented the project.
Labour has proposed to charge fees or even push through compulsory purchase orders from developers or landowners that labour believe to be landbanking but this is not the correct way to deal with this issue. It is often the case where sites have been granted planning permission but under Section 106 the planning requirements can make it difficult for the developer or even funders to back new development. This could mean that derelict buildings and sites are dealt with by the local authorities. This could result in a speed up in the process rather than the original proposals causing problems and essentially stalling the process.