While media attention has been on Theresa May, Brexit and the Tories, chatter in the agency industry has been about what Labour might mean for sales and lettings.
What seemed an almost impossible notion three years ago - a hard-left Labour government - is by no means impossible: despite a likely drubbing in the European Elections, Labour’s vote in a first-past-the-post election to Westminster would be much stronger.
Some say this is already affecting the market.
Marc Schneiderman of Arlington Residential agency - who believes a Jeremy Corbyn win could wipe 20 per cent off capital values - says: “At no time during 35 years in property can I remember such unease … We recently sold properties on behalf of two clients because they had concerns about a Corbyn government. Both have chosen to rent and are watching the market carefully.”
A recent poll of voting intentions for a UK Election (taken on May 21 and assuming The Brexit Party fields candidates) shows Labour on 31 per cent and Conservatives on 21; such a result could give Labour a substantial majority, with a mandate for change.
So let’s begin with what we know about its policies affecting the sales market.
Labour housing spokesman John Healey has made broadly sympathetic comments on reform to the house buying process - now under active consideration in the Property Agents Working Group, chaired by cross-bencher Lord Best and working to put flesh on the bones of the Conservatives’ manifesto pledge to make house buying simpler and quicker.
So there’s unlikely to be any significant change to that process, now ongoing.
While there’s been no expressed view on stamp duty, a Corbyn administration would certainly want to be more aggressively redistributive, with property an obvious sector to tax.
Charles Curran, the principal and data analyst at Maskells agency in London, has helpfully produced figures suggesting what a possible annual property tax might raise.
Curran has looked at taxes in Belgium (where owners of a home valued above a certain threshold pay 1.5 to 2.5 per cent of the home’s estimated value in tax each year), and in Germany (1.5 to 2.3 per cent). He says that for a £1m property this could mean £15,000 to £25,000 tax per year for owners: for a £500,000 home it would be £7,500 to £12,500.
Importantly, he adds in relation to his £1m property value example: “It means that mortgage lenders would remove a figure between £1,250 to £2,000 plus per month from their affordably calculations if you are seeking to refinance, trapping many borrowers into a standard variable rate mortgage (post fixed term).”
The devil would of course be in the specific provisions, especially the lower and any possible upper threshold of property value - but this is a valuable example to consider.
Perhaps in tandem with that would be a mansion tax: this was mooted by Ed Miliband for Labour in the 2015 election and even hinted at by David Cameron’s campaign too. The Miliband tax would have been on homes valued at £2m or more - a Corbyn version might well kick in at a significantly lower capital value.
It’s pretty obvious this would be unpopular with our industry and Giles Cook of the Best Gapp agency probably speaks for many when he says of a future Labour administration: “Property wealth will be taxed to the maximum with increased SDLT and a mansion tax, impacting further on overall activity, prices and market confidence.”
Still on the sales market, Labour has hinted that it may seek to control - at least indirectly - house price growth. The tool would be Bank of England limits on mortgage lending.
It’s not just agents who have been critical of this idea: former BoE Monetary Policy Committee member Kate Barker, a housing expert, says this would be ‘absurd’ without the Bank being given a vast range of other powers, which seems unlikely from a new government inclined to keep power in political hands rather than vest it in an institution.
“I’m not sure what device they can impose otherwise on sale values. My instincts are that the mere presence of such an extreme government will send values plummeting and therefore, negative equity, for some, will become more of a problem than rising prices” says Trevor Abrahmsohn of another London agency, Glentree Estates.
One more issue, indirectly affecting sales, is that Labour’s shadow chancellor John McDonnell has suggested he would lower the threshold for inheritance for couples leaving family homes to their children from £800,000 to £425,000.
There may well be very widespread concern amongst the middle classes over that - even if £425,000 is actually twice the price of an average home, so would still hit chiefly the relatively affluent.
Meanwhile Labour has been vocal on its policies towards the private rental sector.
These include in-principle backing for the various measures introduced in recent years by the Conservatives plus some form of rent controls - possibly locally determined and focused on urban areas rather than across the entire country.
There’s well-documented evidence that it has not worked well in Germany where capped rents are widely associated with poorer quality properties that have been starved of investment and improvement by their landlords.
“Rent controls can … inhibit the movement of people due to tenants reluctant to move from a rent-controlled into a market-price property. Housing markets require a gradual and subtle application of regulation rather than the two extremes of low regulation with market forces running rampant, and blunt tools being heavy-handedly applied at short notice” explains Lee Layton, associate director of research at Cushman and Wakefield.
There may be additional licensing and registers too: vague pledges have been made by Labour to add significantly to the red tape for landlords and agents alike.
Labour would be active in other areas too - widespread house building and obstacles for overseas buyers, for example - and these would be popular in much of the country (un-less you lived near a new housing estate, that is).
But for our industry even the possibility of a Corbyn government clearly raises worries, especially in an increasingly populist political climate.
After a decade of Conservative governments producing unwelcome policies for the private rental sector, you would think we might have become immune to political shocks: but it’s just possible that we haven’t seen anything yet...
*Editor of Estate Agent Today and Letting Agent Today, Graham can be found tweeting all things property @PropertyJourn
**This week Graham was named Property Commentator of the Year, Property Trade Magazine Journalist of the Year, Property Columnist of the Year and overall Property Journalist of the Year at the Property Press Awards 2019.