In April, Theresa May called a snap election which will take place this Thursday. The result is currently looking as if it could go either way: Conservative or Labour. But what impact could the result have on the commercial property market?
The dust was just beginning to settle after the Brexit referendum when once again property owners entered the choppy waters of an unstable market, feeling pressure after the snap election announcement.
Snap General Election: negative or positive influence?
It has been said by market experts that the results of the snap election will have a positive influence on the industry. As parties have posted their plans in their manifestos, this reveals the direction in which the market is going to go – adding a degree of stability which has been missing in the time post-referendum and pre-election.
However, there have also been warnings that no specific outcome is going to solve the current lack of construction skills in the UK – one of the biggest factors affecting the country’s property market. Nevertheless, even though the election has caused many to feel there is instability in the market and has slowed down deals, could the election finally steady the ship?
The stock market seemed to have reacted well to the snap election announcement and the residential market remained unaffected as there was little time for there to be a huge impact in this area.
Where do the main parties stand?
At this point in the election process, it is of course a two horse race. When the snap election was first called, it was predicted the Conservatives would win with a landslide majority. However, in recent weeks Labour has gained popularity and polls suggest the election could go in either direction. But is it that important who wins office on June 9th for the commercial property market?
Economy and housing, the Conservative’s main pledges:
- Achieve a balanced budget by 2025.
- Rule out increases to VAT.
- Stick with current plans to raise personal tax allowances and cut corporation tax.
- Review the business rates system.
- Build one million homes by end of 2020 and 500,000 more by end of 2022.
- Build 160,000 houses on government-owned land.
Labour’s pledges for the economy and property markets:
- The introduction of controls on rent rises.
- Suspend the right to buy policy.
- Build at least 100,000 council and housing association homes a year.
- Introduce a £250bn stimulus package over 10 years.
- No increases in personal National Insurance or VAT.
- Raise corporation tax rates to 26% by 2020/21.
All sounds good, so what’s the problem?
The main problem that seems to be affecting the property market at this point is fear of the unknown. As Election Day approaches, it appears increasingly difficult to predict the outcome. For now, the market faces instability until, as we expect, it is able to adjust to either result.
What we can say is that housing has played a key role in the election – indeed in his first interview post-election announcement Corbyn mentioned that every manifesto will have something interesting to say about how the housing market can be fixed.
No one can say exactly what the result of the election will be and until one of the parties takes office on June 9th, the property market is likely to be treading water, anxiously waiting to see how the winning party might put its plan into action. What is important is that after a period of stormy seas, the commercial property market might finally enter calmer waters.
If you would like specific advice about investing or managing commercial property, please contact Caroline Jones, our Head of Commercial Property.