The general election will have a major influence on the property market over the next few weeks, but which party is best to suited to solve our housing crisis?
With less than three months remaining until this year’s general election, a number of people remain undecided about which party to vote for. From the NHS and tax to Europe and education, there are many issues that people need to consider when deciding which party is best suited to run the country.
But there is another crucial matter that we need to deliberate and that is which government is best suited to oversee the residential property market?
From new property taxes and legislation to the role property plays in driving the UK’s economic growth and building better communities, housing is high on the political agenda ahead of the general election on 7 May, but how might the result affect you and the wider property market?
Government policies can have a big impact on housing, including property prices, as past data shows.
Residential property prices have appreciated twice as fast under a Conservative government since 1970, at an average of 19% per year compared to a Labour performance of 10% per annum, based on data sourced via the Nationwide House Price Index.
A glance at the total increase shows that home prices appreciated the most under Tony Blair’s tenure, up 211.3%, followed by that of Margaret Thatcher, with prices increasing by 187.9% during her time at No.10.
However, on an annualised basis, UK prices performed most strongly under Edward Heath when growth averaged 32.8% per annum, although high inflation rates contributed to the strong growth recorded during his premiership.
Of course, a significant increase in prices can be of comfort to some homeowners who may be thinking about cashing in on the boom and downsizing to a cheaper property. However, it often concerns those with aspirations to gain a first foot on the housing ladder or upsize to a larger more expensive property, and so they may be hoping for lower price increases or even a drop in values altogether.
Housing promises to be a major issue over the next few weeks in the run-up to the election, but what are the main policies the parties are proposing to attract your vote?
The Conservative party has vowed to deliver 275,000 new affordable homes between 2015 and 2020, including 100,000 starter homes which would be offered to first-time buyers under the age of 40 at a discount of 20%, as part of the wider delivery of new build homes, with plans to free up more public sector land for housing, whilst maintaining protection for the green belt.
The party claim to have released enough formerly-used surplus public sector land for 100,000 homes so far, with plans to go even further after 2015 and release enough for 150,000 homes. The Chancellor, George Osborne, has also set a clear target to have outlined planning permission on 90% of suitable brownfield sites by 2020.
The coalition government, led by the Tories, has also extended the Help to Buy equity loan scheme to last until 2020, helping thousands more aspiring homeowners to acquire newly built homes.
Brandon Lewis, the minister of state for housing and planning for department for communities and local government, said: “Help to Buy is enabling homeowners to purchase with a fraction of the deposit they would normally require, and leading developers say they are building more homes as a result. Since the launch of the scheme, housebuilding starts have risen by 20% while 77,000 people have been helped through Help to Buy.
He continued: “The numbers of first-time buyers has hit a seven-year high; planning permission has been granted on 240,000 new homes in the year to October, and housebuilding starts are at their highest since 2007.”
Lewis insisted that the Conservative party, if elected to government in May, will stay true to the principles “that put us on the road to economic recovery”, so that it can “support the aspirations of hard-working people and build the homes this country needs”.
Labour also wants to boost the supply of new build homes by increasing housebuilding rates to 200,000 a year by 2020.
“We need to boost housing supply to tackle the cost-of-living crisis,” said Emma Reynolds, shadow housing minister. “There is a chronic shortage of affordable homes in many parts of Britain.”
Unless rising demand for housing is matched with rising supply, Ms Reynolds warns that there is “a real risk” that soaring house prices will push home ownership out of the reach for many would-be buyers.
Reynolds continued: “Where David Cameron has failed, the next Labour government will act. Ed Miliband has made a firm promise: under the next Labour government, we will be building at least 200,000 decent homes a year by 2020. We will tackle the shortage of homes and stand up for first-time buyers.”
The party has also vowed to offer local authorities greater power to stop buy-to-let investors purchasing new homes or allowing them to be left empty, in an effort to help more first-time buyers gain a foot on the housing ladder.
“We will clamp down on the blight of empty homes and take steps to improve standards in the private rented sector,” Reynolds added. “A Labour government will introduce a national register of landlords and give local authorities greater powers and flexibility to introduce licensing schemes.”
Labour has also called for the mandatory regulation of the residential lettings and management agent market.
However, Labour’s flagship housing policy is for the introduction of an annual ‘mansion tax’ for owners of £2million-plus properties, which would disproportionately penalise homeowners in London and the South East who are already responsible for the vast majority of property tax take in the UK.
If the mansion tax is introduced, some experts believe that those sellers who have had their homes valued at over £2million will need to lower their expectations on the deal they will be able to secure.
If the threat of a mansion tax does deter some people from buying property at the top end of the market, the ricochet effect would almost certainly affect the lower end of the market.
The Lib Dems have championed the idea of a mansion tax for years – initially it was a 1% tax on homes worth more than £2 million – but now it is in the form of adding higher council tax bands.
The Liberal Democrats has also vowed to significantly increase the supply of new homes if elected at this year’s general election by somewhat ambitiously delivering 300,000 new homes per year, supported by a ‘radical approach’ to housebuilding and the construction of various garden cities.
The Lib Dems may also scrap the Help to Buy scheme and potentially replace it with a new Help to Build initiative.
“Housing will be a huge issue at the forthcoming election in a way that it never has been before – certainly not in my lifetime,” said the Liberal Democrats’ Stephen Williams, Minister for Communities and Local Government. “If the Liberal Democrats are elected, we will build 300,000 new homes a year to help cope with the country’s rising population.”
To help boost housebuilding levels, the Lib Dems are contemplating the idea of setting up a housing investment bank to finance more new build housing developments.
He added: “It’s not just about numbers. We need to build quality properties, including zero-carbon homes.”
The general election will have a massive on the housing market over the next few weeks, with a degree of buyer uncertainty already starting to appear in the run-up to the voting in May, which has contributed to the recent slowdown in the housing market.
However, growth should get back on track after the election, with the average price of a home set to rise by 30% across England and Wales by 2019, according to a recent projection made by Oxford Economics.
But while the uncertainty of this May’s general election may dampen demand to some degree in the sales market, the rentals market is expected to flourish, with rents set to increase across many parts of the country, on the back of higher demand from tenants.