By Nick Taylor, of Hadley Taylor in Norwich
What’s in store in the general election year? Last year couldn’t have been any worse if we’d been writing a horror movie script. The predicted increase in activity now is due to the fact that many buyers and sellers have put their plans on the back burner during the last couple of years but many of these folk will see 2010 as the year to move on. The obvious blot on the landscape this year is the general election in May. Election year is always a time of uncertainty for the housing market. Estate agents tend to want to see the back of elections as soon as possible because they lead to uncertainty in the minds of buyers and sellers alike. So let’s look at some of the possible outcomes and their effect on the housing market. Labour could still win it of course, due to the legion of voters who make up the client state. Under a fourth term of Labour we could see the housing market become an area the government targets to raise more tax in its efforts to pay down the deficit. We could see increases in stamp duty and the introduction of capital gains tax on your primary residence. Estate agents may face more legislation of their businesses under Labour as we have seen in recent years and this will inevitably push up the cost of sale. The worst case scenario is for a hung parliament. A hung parliament would result in a weak government with little power in the House of Commons to push through the sort of measures required to reduce the deficit at the necessary rate. The consequence of this could be a downgrading of the credit rating of UK plc, or even sovereign default. A hung parliament, although unlikely, is a possibility and would be very bad news for the economy and the housing market, resulting in a double dip. If the Conservatives win we could see a more settled second half of the year for property. However, the sobering numbers that will come out of the treasury once victory has been secured will keep the lid on growth in the economy and, as a result, wages and consequently house price inflation for some time as the age of inevitable austerity begins. David Cameron has pledged to scrap HIPs if the Tories win power. The controversial packs have already cost sellers about £700m during a time when the housing market could have done with a break, so this will be good news to some. The Energy Performance Certificates, which I have to say are probably the most useful part of the packs, will probably stay under the Tories however, and this can’t be a bad thing. Also, the much heralded increase in the inheritance tax threshold will be welcome news for all those elderly people hoping to leave their property to the next generation. Whatever the outcome of the election, I think we are in for the most fascinating few months we’ve had in this country for about 30 years.
Nick’s on 01603 250248.