The 2019 General Election, the first to take place in December since the 1920s, saw the Conservatives win their largest majority since 1987, putting Boris Johnson in the kind of comfortable position Tony Blair enjoyed for much of his premiership. As such, we seem to be set for just under five election-free years — the kind of consistency that many property investors will relish after months of stagnation.
How confident are investors in the new government? In a bid to understand this question, FJP Investment commissioned a survey of over 750 UK property investors, asking their opinion on a range of policies the Conservative party are planning to introduce.
A bright outlook
There’s little doubt that investors welcomed many of the Conservative proposals made in the lead up to the 2019 General Election. With so much latent, untapped demand for affordable housing amongst Brits, it was little wonder seeing as many as 70% of investors were in favour of the proposed stamp duty surcharge on foreign buyers.
A similar number of investors also seemed to support the Government’s plans for stakeholder engagement with new build planning. New builds that are supported by their community are much more marketable, and 68% of investors said they are in favour of democratising the process by giving local resident more say in the style of new developments.
The support for Boris Johnson and Chancellor Sajid Javid’s plans were broad, extending outside of just their ideas within the property space. Of the other election promises, 59% would be happy to see income tax rates frozen for the next five years. Further, just over half (54%) are in favour of not raising capital gains tax between now and 2025 — helping to invigorate the market by making investments more appealing.
In these ways, there appears to be significant positivity around the Government’s plans. Since the election, Chancellor Sajid Javid has also expressed his plan for a new construction strategy to be released alongside the upcoming budget on 11th March 2020. This, in tandem with the proposed reforms, would help increase the potential of UK property and help create long-awaited new opportunities for those up and down the property ladder.
But how?
Despite the optimism surrounding the Government’s aims and promises, the market has some major concerns about how they’ll be implemented.
A majority of those investors surveyed by FJP Investment (61%) think the government will miss its housebuilding target of adding million new dwellings by the end of the parliament. Naturally, the sector is likely responding to what it’s seen before: countless big promises and missed targets. Indeed, for many, the housing crisis may be beginning to feel like an intractable problem that no government will be able to efficaciously manage.
Big issues require thorough focus, investment and long-term coordination, all of which tend to be in limited supply in politics. With the ongoing Brexit saga, this is certainly the case — 58% of investors we spoke to expressed concern that the Government was focusing on Brexit to the detriment of other major domestic issues. As the process is set to continue for several more years, there’s a risk this will continue to be the case.
Despite this laser-focus, 41% of investors think Boris Johnson will fail to deliver Brexit at the end of January. After the passing of the Withdrawal Bill, this goes against the new consensus but speaks to a broader truth that many investors simply doubt how effective any government can be. After Theresa May’s two-year struggle to get the House of Commons on her side, this is certainly a reasonable feeling to have. However, with a huge new majority, the new prime minister should be able to more easily get his agenda passed.
As such, it is clear that UK investors have confidence in the Government’s purported priorities. Despite the election having a near-constant Brexit focus, the Conservatives have gone some way to supporting policies that will invigorate the real estate market.
However, they remain deeply unsure whether Boris Johnson will follow through on his claims. As the year continues and the Brexit process nears toward a conclusion, he will have the parliamentary time to reassure investors with actual implementation. Let’s hope the Government doesn’t let the market down – the real test will come on 11th March when the Chancellor delivers the long-awaited and highly-anticipated 2020 Budget.
