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Why 2015 could make or break
the UK’s property market
For homeowners – especially those in the South East and London – it has never been
more important who wins the next general election, says Trevor Abrahmsohn…
In the past, whether it be New Labour or Conservative who won an election, it mattered
little. Neither party were advocating any particular alarming legislation as it applies to
property ownership and therefore there was no predictable downturn or upturn before or
after the Election. It was a case of ‘same old’. I will admit, there has always been a hiatus a
few weeks before and after an Election where the market has moved sideways for a short
while but no real change has manifested itself.
The spring Budget and the Autumn Statement have an effect particularly where Stamp
Duty rises have been leaked beforehand and then there has been a real crescendo of activity
in the weeks, days and hours before the Budget announcement where buyers accelerate
and precipitate their activities in advance of rises in SDLT (Stamp Duty).
The outcome of the May Election in 2015 will be different. With the Lib-Dems making
Mansion Tax a main plank of their Manifesto and Ed Balls, of the Labour Party, aping
their sentiments, the spectre of this draconian tax is having a very profound effect on the
London property market particularly above £5-10million. Frankly, you can’t blame anyone
since in London £2million will not buy you a mansion and it is a mischievous plot to
describe what is otherwise a tax on London’s wealthy.
By way of illustration, a person living in say a £5million house will be facing a gross tax
of £60,000 per annum which is probably a third to a half of their gross income. A widow,
for instance, who bought their family home many years ago and does not have a huge
income will be distressed at this scurrilous and punitive tax. Even if they roll up the tax
with interest, until such time as the widow dies or sells, the benefit that she would like to
pass to her family (after death duties) will be soaked up by the Mansion Tax process.
It is therefore no wonder that buyers and householders are so vexed about this and it is
already having a profound effect on sentiments where people are delaying decisions until
the outcome of the Election is better known. This negative sentiment has been getting
gradually worse over the last 18 months from the obscene rises in SDLT since the Budget
of 2012 where non-corporate tax has gone up by 40% and corporate by 300%.
In addition the Chancellor (egged on by the Lib-Dems) has changed the taxation
arrangements on Capital Gains and there is a “posse of the press” who consider ‘Jonny
Foreigner’ buying property in the UK as being thoroughly ‘undesirable’ soaking up our
limited supply of private housing.
The net effect of all this is that the market outside the Central London area, particularly
along the north west London corridor over £5-10million pounds has been conspicuously
p.8
this is just a small selection of highlights from August’s views on PrimeResi.com
there’s more at www.PrimeResi.com/views