The defeat of Labour in the General Election has benefitted the top tier of the London residential property market. Property expert Simon Morris explains what this may mean for the long-term prospects of the UK’s most prosperous residential sector.
The mansion tax
The UK has just endured the most nail-biting election in recent history. Every poll suggested that neither the Conservatives nor Labour would win a majority, so both parties did everything they could in the run-up to the national poll to attract voters.
Labour leader Ed Miliband promised to introduce a ‘mansion tax’ if he was elected. This would have placed an additional tax on properties worth £2 million or more. This spurred worry across the UK housing market, especially in London where there are many houses that are valued above £2 million. Data compiled by Unbiased.com showed that 85% of the homes that would have been subject to the levy are in London and the South-East of the UK.
Number of £2 million properties on Getagent.co.uk more than doubles
Labour didn’t win the General Election; David Cameron’s Conservatives won a majority and took complete control of Westminster. City A.M has reported that the number of properties worth over £2 million that were listed on estate agent comparison site Getagent.co.uk more than doubled from 294 to 639 in the weeks after the election.
Peter Rollings, chief executive of agents Marsh & Parsons explained the significance of this news to City A.M. Rollings said that “prime central London hasn’t picked up yet, but we’ve seen an immediate boost in outer-prime – south of the river, as well as some areas in west and north London.”
Meanwhile Nick Davies from agents Stirling Ackroyd cited the London area of Aldgate as an example. He noted that there has been a steep rise in interest for several penthouses worth £2.5 million apiece in Aldgate since Labour’s resounding defeat. He said that “for the first time in a while we’ve got serious interest, people talking about offering and more viewings. Before the election we had none of that.”
Invest in the London residential market
These early indicators show that buyers are relieved that the threat of the mansion tax has been removed from above their heads. Therefore we could see an increase in activity in upmarket London residential property that carries the sector through the rest of 2015, although it’s too early to state this with any certainty.
Investors may not have the money to capitalise on a boom in the higher tier of the London property market. However property specialist Simon Morris would argue that they don’t have to invest huge sums to draw profit from the London property market. They just need to do their research and choose the right location.