We are weeks away from the General Election, that high-octane period of last-minute hustling and speechifying which results in, well, not much changing at all. Traditionally, property investors tend to play it safe during this time, fearful of any uncertainty.
However, election years have historically proven to be good for property sales; in 2005 and 2010, the three months following the election saw considerable growth compared to the same period in non-election years. So while investor behaviour certainly changes following an election, there is no actual evidence to support the theory that an election has any significant impact one way or the other on the property market itself.
In fact, there was a surge of buyer interest in March this year which defied all expectations, as the number of home-hunters in the UK grew by 22% compared to February. The investment bank Jefferies has also done a complete 180 on its previous pre-election stance regarding UK property. The firm originally withdrew all buy recommendations and predicted price falls in London and the South East, but now states that “the latest data points to a stronger pre-election housing market than we had anticipated.”
“With less than a month before the UK votes, the anticipated slowdown and profit-taking have yet to be seen,” says property analyst Anthony Codling. “Election fears have not yet materialised. We had thought that the UK housing market would at best pause for breath and at worst decline significantly ahead of May’s General Election and that profit-taking following strong share price performance in Q4 2014 would be the theme of Q1 2015. We were wrong.”
Emerging prime property in South West London is also proving more robust than predicted, according to a new prime index from Douglas & Gordon. “This quarter’s index confirms that emerging prime has become the sweet spot of the professional private rental sector,” says director Ed Mead. “One bed flats in the £300,000 price range are one of the best investments, given their protection from political interference and the demand from young professionals who increasingly feel more at home in places like Clapham than Central London.”
One area which is always going to be a safe bet for would-be landlords is student property. This functions as an entirely separate market, and has even been called one of Britain’s greatest-performing assets, drawing more than £3.3 billion in investment so far this year. And if some parties have their way and scrap tuition fees altogether, we will find ourselves with even more students in need of a place to live, making university towns the El Dorado of the property world.
Sure, there are a few red flags which might put off prospective buyers, such as mansion tax and rent caps. But mansion tax will realistically only affect a minor proportion of home-owners, not first-time investors. We don’t want rent caps by any stretch of the imagination, but should Labour, or even more laughably the Green Party, come to power, there is no saying that blanket rent caps will be introduced across the private rental sector. The much more likely outcome is that they will be used to protect tenants from a small number of unscrupulous landlords, and ultimately help regulate the market.
Suffice to say, there is absolutely no reason why you can’t go ahead and invest in property before knowing the result of the General Election – if you’re smart. And if you’re undecided on which way your vote should go, maybe our 2015 General Election Survey will help shed some light on things, as we ask landlords up and down the country how they are voting, and why.
George Spencer is CEO at Rentify.