Fresh from his emphatic leadership election win Jeremy Corbyn has been waxing lyrical about his plans for the future. Under his leadership the Labour Party will be pushing for an array of employment regulation changes, massive investment in the UK manufacturing industry as well as welcoming visitors from overseas. Over the next few days we will no doubt see experts picking apart his policies and discussing how they may impact areas such as the property investment market.
So, what should property investors expect if Jeremy Corbyn was to become Prime Minister of the United Kingdom?
It has already been confirmed that income tax for high earners would increase under a Jeremy Corbyn government. This is not a surprise, not a sudden policy change but something which has been discussed time and time again over the last couple of years. Quite how this would impact those towards the higher end of the UK property market remains to be seen but ultimately we have been here in the past and the change has been limited in reality.
Tinkering with top rate tax rates has proven to be relatively ineffective in years gone by and while Jeremy Corbyn may be leading a new brand of socialism the country will always require entrepreneurs and business investors.
The government of today and the governments of years gone by have always promised to increase the amount of social housing across the UK. There have also been promises to increase newbuilds in the private sector but fact remains that newbuild numbers have been and continue to be well behind those required. There is no way that any government can overnight increase the amount of social housing available therefore it will be a combined effort between the public sector and the private sector.
The idea of rent caps has also been discussed in great detail over the last few years with even Conservative governments at one point flirting with the idea. The simple fact remains that if any government requires assistance from the private sector then there will need to be a return on their investment. Capping rental figures would take away a large element of the free market principle used in the UK and would ultimately scare off many private investors. So, governments and politicians may huff and puff about rent caps but history shows us they do not work.
A suggested £100 billion investment in the UK manufacturing industry would certainly go down very well with the business fraternity. The Labour Party idea to fund this via a nationalised bank seems fairly sensible in theory but in principle it does start to fall apart. Once you have governments dealing directly in so-called “free markets” this adds a greater amount of uncertainty and would in practice reduce the amount of money available from the private sector. So, while some politicians may promise the earth and direct investment from governments in the future this is unlikely to happen in the modern day investment arena.
Under any future government the basis of the UK economy will remain relatively unchanged although they will likely tinker with the more visible elements of the tax system, property market and direct investment in the UK economy. However, the promise that the UK would be open to immigrants, with no upper limits, would in itself create growing demand for accommodation which plays right into the hands of private investors in the UK property market.