The London prime property market flourished under the last Labour government, but past performance is no guarantee of future results.
Still, some in the industry think prime property prices could see a bounce under the new government.
“A lot of buyers postponed plans due to a combination of high interest rates and political uncertainty,” co-founding director of Aston Chase, the high-end North London estate agent, Mark Pollack, said. “[This] will have resulted in a degree of pent-up demand which I suspect will help to maintain market stability.”
Pollack added there could even be a boost to markets if interest rates come down and stamp duty is abolished.
However, this is unlikely: Labour has pledged to increase stamp duty for foreign buyers by one per cent.
Jeremy Gee, managing director of Beauchamp Estates, agreed the prime market was in for a profitable period: “All these people [who waited for the election results] will now re-enter the homebuying market after the new government is formed.”
“We [saw] a sharp increase in short-term lettings deals [before the election],” Gee said.
Homebuyers have been waiting for certainty on taxation and policy announcements, he added.
The long-term outlook is positive, too.
“Interest rates are the most important factor controlling market activity right now, with domestic mortgage-backed buyers sitting on the sidelines waiting for some good news,” Gee continued.
“With the expectation of lower base rates in the near future, and therefore reduced mortgage costs we believe are coming soon, an uplift in activity in the market should resume.”
A more stable political and economic situation should provide another boost, making London—and the UK as a whole—a more attractive place to live, work, and invest.
Will an exodus of non-doms hit the market?
Describing Hunt’s decision in the last budget to up taxes on non-doms as a huge “own goal” for the UK, Pollack said that an exodus of non-doms from London after Labour’s win was “bizarrely pre-empted” by the conservatives ahead of the election.
The changes, which reduced the number of years non-doms could claim tax-free foreign income from fifteen years to four, could lead to a glut of super prime properties coming to the open market or being discreetly offered for sale, he said.
This, in turn, will “soften prices for these properties and inevitably, in due course, ripple down the market.”
However, he is still optimistic about the London market: “Despite lots of extremely serious issues and concerns, the UK still represents a safe haven and stable environment compared to many other countries around the world,” Pollack said.
“It should be noted that the London property market historically has done well under Labour governments, and there is no reason why this should not continue under Sir Kier Starmer,” Gee said.