Labour have been predicted to give the Conservative Party their “worst defeat since 1832” in today’s election, but where do property investors stand on polling day?
Some people will have already cast their votes today, while others will be heading to the polling stations later on to put their X in the box next to their favoured MP candidate.
While the timing of the election may have come as a surprise to many, all the major political parties were quick to enter the battleground to persuade the British public why they would be the best bet to take – or retain – the reins of the government.
Labour have been the firm favourites to win the election for some time now, and this gap has widened rather than shortened as time has gone on. Polls have suggested that Labour leader Sir Keir Starmer could win a majority of more than 200, beating Tony Blair’s 179 majority in 1997.
A mixed bag for investors
For the country’s property investors – as well as those based overseas who own property in the UK – there are a unique set of factors to consider when deciding who to vote for. While the Tories have traditionally been a “landlords’ party”, some of the party’s moves have been seen to penalise rather than aid the private rented sector and the landlords within it.
This includes Section 24, which was rolled out in 2017 and was fully effective from April 2020, and meant buy-to-let landlords could no longer claim tax relief on the interest paid on their buy-to-let mortgages. It has instead been replaced with a 20% tax credit, and means a bigger income tax bill for many.
The Conservatives were also responsible for bringing in a 3% stamp duty surcharge on second homeowners and landlords (which is payable on any additional property purchases to your main residence). They also removed the 10% wear and tear allowance that landlords had been allowed to claim on properties.
The government has also been criticised for failing to sufficiently address the housing crisis, and the shortage of homes has impacted the private rented sector along with some landlords exiting the market. This in turn has helped to push up rents.
How will investors vote in the election?
Despite the government being heavily criticised by some in the sector over recent years, the Conservatives are still expected to be the most voted for party by property investors in this election – although with somewhat less support than might have been expected.
One survey carried out last week by OpenRent revealed that less than a third (31.8%) of landlords said they would vote for the Conservatives in the general election.
However, almost the same amount again (30.8%) said they were undecided last week on who they would vote for, while Labour the second most-popular option with 15.3% of the vote. This was followed by Reform UK at 14.4%.
Despite the Tories apparently being the favourites among property investors in this poll, there was a general air of criticism against the government from the respondents, with 38.2% saying they were “very dissatisfied” with the current government’s handling of rental market policies for landlords.
Property investors won’t be perturbed
Looking at historic housing market performance around the time of a general election, there is normally very little turbulence as a direct result of a political junction. The backlash from Brexit in fact caused a bigger stir in the market than the elections surrounding it.
Susannah Streeter, head of money and markets, Hargreaves Lansdown, backs this up: “While chatter around the impact the General Election result is set to ramp up again, the impact on financial markets is likely to stay minimal especially if the current poll predictions materialise.
“Even a Labour super-majority is unlikely to dramatically unsettle investors. It would enable the new government to get on with their agenda, which has largely been digested by markets.
“Anything other than Labour dominance is more likely to be unnerving given expectations. It could weaken the position of Keir Starmer and his ministers and hamper their ability to drive change.”
The government mustn’t penalise property investors
It is interesting to note that there is some common ground among the two frontrunners in today’s election when it comes to housing market policies.
For example, both seem intent on reintroducing housebuilding targets, and Labour and the Conservatives have both indicated that they would continue to push through rental reform, despite the fact that the Renters Reform Bill is very nearly ready to be put into action.
Abolishing Section 21 “no fault” evictions also seems to be high on the agenda for both parties, which will be welcome news for tenants but also for property investors, provided the promised overhaul of the court system takes place to make it fairer for all concerned.
Commenting on possible election outcomes, Sián Hemming-Metcalfe at Inventory Base, said: “Over the past few years, the government has actively penalised landlords with legislative changes designed to make buy-to-let investment less profitable.
“Now that general election pledges have been put on the table, it’s disappointing to see that nobody is offering anything substantial in the way of recultivating buy-to-let investment.
“The Conservatives and their Capital Gains Tax pledges provide a little positivity, increasing the potential returns of property investment, but if anything, a tax relief of this sort is more likely to drive landlords to leave the sector rather than encouraging growth.
“What I would like to see from whoever is elected on the 4th of July, is more decisive action around issues such as the Regulation of Property Agents (RoPA) and offering more support to the industry to deliver better and safer homes for tenants.”
“Whatever the outcome of the election on Thursday, we are hoping for a new era of leadership that understands the way to address a housing crisis is not to suppress the entrepreneurial landlord.
“We need leadership that avoids the easy PR of diverting blame and demonising landlords and instead pushes for proper, long-term solutions to our nation’s housing problem that understands a good mix of tenants and owner-occupiers is essential.”
