This year has definitely been one for the history books, with Theresa May stepping down, Boris Johnson becoming Prime Minister, Brexit delays and Johnson’s three unsuccessful attempts to call an early election.
Tomorrow the UK will head to the polls to vote in the general election for the second time in two and a half years. The British public will cast their vote, deciding which party they want to form a new government.
Throughout most of the year, discussion of calling an early election was a hot topic amongst political analysts. On 31st October, formal approval was granted by Queen Elizabeth II to the Early Parliamentary General Election Action 2019, which came into action immediately. On Wednesday 6th November Parliament was officially dissolved in the five-week run up to the election.
Whilst Brexit seems to have dominated campaigns surrounding the election. Other national issues have also been touched upon; the environment, the NHS and housing issues. Ahead of tomorrow’s general election, we’ve taken a look at each parties pledges in their 2019 manifestos in regard to key housing issues in the run up to the election. Here’s what property investors considering investing in the UK need to know:
- The Conservative party on planning on introducing a “lifetime” deposit which stays with tenants as they move through the rental market.
- Create one million new homes by 2025. 300,000 of which will be complete in the early part of the new decade.
- Increase stamp duty by 3% for non-UK residents buying property – rises in stamp duty rates will encourage the shift away from property in London to more lucrative areas with lower house prices and higher yields, such as Manchester.
- Labour pledges to put bad landlords out of business with new charter of renters’ rights and ‘property MOT’. Landlords who fail to maintain their property to high enough standards could be fined up to £100,000.
- Increase management standards in the UK’s Private Rental Sector, highlighting the need for investment in companies who offer a high level of service to renters.
- Create a government-backed tenancy deposit loan for first-time renters under 30, supporting young people moving into the rental market.
- Build 300,000 new homes in the next four years, including 100,000 homes for social rent.
How will the result of the election affect the UK property market?
Regardless of the outcome of the election, it’s important to remember that pledges made in political manifestos are not guaranteed. Both the Conservative and Liberal Democrat manifestos state the need for new housing. 300,000 is the current target for new homes each year and this is not being met. The rate of population growth and rental demand far outpace housing targets pledged by politicians in Westminster.
Whoever wins the election tomorrow, the UK continues to have a shortage of property and a high demand from tenants. Demand for housing in England far outweighs the level of supply. In cities like Manchester, an area experiencing huge economic growth and job creation, the demand for more housing is unprecedented.
Usually, the UK property investment market slows down in the run up to election, with investors waiting for the result to make a move. With an election result and Brexit approaching, there’s still a huge window of opportunity for international investors. Whilst the British pound is climbing pre-election, it’s still not as high as it was in April 2018, making now a great time to invest in British property.
Below we’ve highlighted the British currency in comparison to other key currencies, over three time periods.
|Currency||Apr-18||Aug-19||Dec-19 (pre election)|
Applying the above table to a property valued at £300,000, here is what you would get for your money at the current value of the pound.
|Currency||Apr-18||Aug-19||Dec-19 (pre election)||Price growth (Aug 19- Dec 19)|
With price growth ahead of the election and the pound expected to rise again in the event of a Conservative majority, now would be the best time to invest before the pound gains value. Investors are seizing opportunities to acquire assets that deliver huge returns, at a significantly reduced price because of sterling devaluation. This currency window of opportunity won’t last forever, the British Pound will regain its losses.
If you’re interested in a Manchester investment, get in touch and speak to our team today.