What will the election mean to the property market?
This election could mean boom or bust to the already fragile property market in the UK.
As we all know, possibly the largest challenge facing the new government will be our economy. The 3 big parties have outlined the steps they will take to try to deal with the £170bn deficit in the UK’s finances.
With it looking increasingly like a hung parliament, what will be the main points of debate from these parties on our property market?
Listed below are some of the key points of each party.
Conservative:
- Scrap home information packs
- Keep the £250,000 stamp duty threshold for the foreseeable future
- Add a new 5% stamp duty threshold for £1m properties from April 2011
- Increase inheritance tax threshold to £1m
- Regards Northern Rock, they have not stated whether they will consider remutualisation
- Include more local initiatives rather than large scale regional building plans
- Will look to split state and part owned banks into 2 parts, retail and investment
Labour:
- Add a new 5% stamp duty threshold for £1m properties from April 2011
- Keep the homebuyer direct scheme for low earners
- Keep Home Information Packs
- The £250,000 stamp duty threshold is due to expire in March 2012
- 10,000 affordable homes to be built a year by 2014
- Northern Rock: Manifesto pledge to consider remutualisation as an option, ‘while ensuring the sale generates maximum value for the taxpayer.’
- Will look to break up large banks but probably not into retail and investment
- Maintain the standard interest rate on the Support for Mortgage Interest Scheme at 6.08 per cent until December 2010.
Liberal Democrats:
- Charge VAT on new homes
- 1% “supertax” on homeowners with properties worth over £2m.
- Create a new “Safe Start” mortgage that keeps buyers from slipping into negative equity
- Propose a green loan for people to invest in home energy efficiency and micro-renewables
- Get rid of home information packs and keep energy performance certificates
- Consider remutualisation regards Northern Rock
- Will split state and part owned banks into retail and investment
- Concentrate on local rather than large regional building plans.
Fresh Invest is a property investment company with the aim of maximising our investor’s funds whilst minimising their risk. For more information see www.freshinvest.co.uk or phone 0800 043 69 56.
I predict it in september, the halifax and sky news predicts it in october!
Looks like my predictions were true, as the halifax reported on october 6th – article.
If you remember i wrote an article last month predicting that with most developers only just starting to build again there will be a massive drop in supply of property.
The Halifax states “a combination of increased demand and a shortage of properties on the market had pushed prices up in recent months”.
Now i think we all know that this increase is definitely due to ease, its supported by a lack in supply but against that you need to show an increase in unemployment and a definite lack of competitive mortgage products.
My further prediciton is that we will see a mini blip in prices followed by a mini crash then probably stability for the future.
Are we in for a Mental May!
Kingsoak, Jennings Homes, Gleeson Homes, Crosby Homes, Bewley Homes, Antler Homes, Barratt Homes, Redrow Homes and last but not least Bellway Homes.
What do all of these developers have in common?
Their year ends are in either june or july!
So why does this make a difference to you and i?
Because most, if not all of these developers have debt to service.
They have share holders that expect a certain return from the compani9es they have chosen to invest with.
If these companies cannot make the necesary sales then there will be no dividend payouts. This will reduce their share price.
So, when May comes around many of the developers that have been telling you throughout the winter that they do not need to make sales, laughing off your offers of 30% discount, will probably take a very different tack!
Now don’t expect discounts to be at the levels that they were at the tail end of last year, they won’t be.
The property market is a strange animal, when the general economy seems to be worse than ever, developers will be telling you that they are doing plenty of sales.
Because of the shoring up of the banks by the Government, many will not be chasing developers at the same rate as they were last year so ultra enormous discounts will probably not be available.
This however may be a blessing, many of the developers have brought their pricing in line with RICS valuations, so although there are not massive discounts, there are real discounts! Hopefully over the next few months a sense of realism will return to the property investment market.
Personally i think that the much reported 40%-50% discount deals are long gone and to be honest, were only done by a handfull of developers selling whole developments on what would probably be classed as a bad site.
Investors should get used to the fact that the no money down deal is by in large gone, and even if they were available, anyone gearing their property at 100% in this market needs a straight jacket, not a property portfolio.
Anyway, lets see what the rest of May holds, im expecting some great opportunities.
