Despite the fact that all parties would in reality prefer to see a buoyant property market in the UK, which they hope will eventually drive the economy out of the doldrums, there are growing concerns that the UK property sector is becoming something of a political football. On one side we have the Conservative party hoping that a buoyant property sector will revive their flagging 2015 election hopes while on the other side we have the Liberal Democrat party and the Labour Party demanding the introduction of taxes on those with properties worth in excess of £2 million.
While the consensus that those who have more wealth should pay more towards the recovery of the UK Plc balance sheet is contentious and highly controversial, in principle many people would not disagree. However, is it correct to penalise those with relatively expensive properties in the good times, while ignoring those who overextended themselves in the bad times and lost everything?
Jockeying for position ahead of the election
The next election in the UK will be in 2015 and the coalition government is hoping that a rejuvenated property sector will help to revive the UK economy as a whole. The recent signs are that the UK economy is starting to pick up and in relative terms the UK property sector is perhaps not looking as expensive as it was when the economy flat lined. So, what can we expect between now and 2015 with regards to political interference and a potentially manufactured economic revival?
Quote from PropertyForum.com : “In what has become something of a political hot potato, the subject of a mansion tax on UK property valued at over £2 million has reared its head again. The Liberal Democrat party estimates this punitive tax could raise around £1.7 billion per annum while the Labour Party is forecasting nearer £2 billion.”
Whether we like it or not, those in power would like to see the economy revive the fortunes of the UK as a whole, while those not in power would prefer to see a struggling economy as a means of jettisoning the current government. There is no doubt that the UK property sector will play a prominent role in the 2015 election and if it were to continue rising at the same pace, which is highly unlikely, there is the potential for it to turn into something of a class war. The fact is that the economy is perhaps stronger today than it has been since the 2008 worldwide economic crash although whether or not the property sector is pushing too far ahead too quickly is a matter for debate.
Will we see a watered-down mansion tax introduced?
It would appear that at some point we will see either a one-off tax on relatively high value properties in the UK or an annual charge as the Liberal Democrats and Labour party would prefer. Political parties will probably attempt to find some middle ground to maintain their support going forward but more and more it does feel as though those who have acquired property in the past, they may have held their property for decades, could have their piggy banks raided by the government yet again!
Whether we like it or not, savers have paid the ultimate price for the UK recession and alleged mismanagement by governments. The UK base rate is currently 0.5% and with many banks and building societies offering paltry savings interest rates, and inflation around the 3% level, in real terms savers are losing money going forward. The relatively high potential yields on UK property may well have prompted many of these savers to invest in the UK property sector although in what could be seen as a double whammy for many of them they could be about to be hit again.