How will the upcoming General Election impact UK housing?

The Potential Impact of the UK General Election on the Housing Market and Household Expenses

The upcoming general election in the UK on July 4th is poised to bring about significant changes that could reverberate through the housing market and household expenses.

Elections have historically been a catalyst for shifts in economic policies and market sentiments, which in turn can impact house prices, rental markets, and broader household finances.

Here’s an exploration of how this election might influence these critical areas.

House Prices

Historical Trends

Historical data indicates that house prices typically rise in the 12 months following a general election, with an average increase of 4.6%. This trend suggests that market confidence often grows post-election as political uncertainties settle. However, the extent of this impact can vary significantly based on the policies of the elected party.

Current Predictions

Knight Frank, a notable real estate consultancy, has adjusted its forecast for prime Central London property prices, predicting a 1% decline in 2024. This revision is largely attributed to the political uncertainty surrounding the election, which tends to affect the capital more profoundly than other regions.

Moreover, a study by Compare My Move found that house prices historically rose by 1.1% more under Labour governments compared to Conservative governments. This suggests that the party that comes into power could influence the direction of house prices through their policy approaches.

Rental Market

Renters Reform Bill

One of the most significant legislative elements affecting the rental market is the Renters Reform Bill, which aims to abolish the Assured Shorthold Tenancy and eliminate Section 21 'no-fault' evictions across England and Wales. Currently stalled in the House of Lords, the fate of this bill remains uncertain due to the dissolution of Parliament before the election.

Party Positions

Both major parties support rental reforms, albeit with differing approaches that could impact the rental market's dynamics. Labour’s policies, perceived by some as "anti-landlord," include potential increased taxation and stringent regulations, which have raised concerns among landlords. A survey by Landbay highlighted that 48% of landlords are apprehensive about a possible change in government.

Housing Delivery and Planning

Labour’s Housing Pledge

Labour has pledged to deliver 1.5 million new homes over the next five years if elected. This ambitious plan aims to address the chronic housing shortage, potentially transforming the housing landscape in the long term. However, the immediate market impact might be limited as such large-scale projects take time to materialize.

Policy Shifts

A change in government could lead to shifts in housing delivery and planning policies, which would affect the supply of new homes. This could have long-term implications for house prices and rental markets, depending on how effectively new policies address housing demand and affordability.

Immediate Market Impact and Long-Term Trajectory

While the immediate impact on buyer demand and market activity might be limited during the election period due to the inherent uncertainty, the policies of the incoming government will likely shape the trajectory of house prices, rental regulations, and housing supply in the ensuing months and years.

Conclusion

The July 4th general election in the UK is a critical event with the potential to significantly influence the housing market and household expenses.

Historical trends suggest a rise in house prices post-election, but current political uncertainties, particularly in London, might temper this effect. Rental markets could see substantial changes depending on the fate of the Renters Reform Bill and the specific policies of the elected party.

Lastly, housing delivery and planning policies will play a crucial role in addressing long-term housing supply issues, shaping the future landscape of the UK housing market. As the election approaches, stakeholders in the housing sector will be closely monitoring party manifestos and proposed policies to gauge the potential impacts on their interests.