Despite the fact that the Conservative Party is still in power, assisted by the DUP, there is intense speculation at this Wednesday might see a change of government. While highly unlikely, the fact that news agencies are even talking about the subject should concern property investors. For the Labour Party to “take over government” in a minority sense without a new general election seems extreme. However, those inside the Labour Party are already discussing how they might approach Brexit in renegotiations with the European Union.
Should property investors be concerned?
It is safe to say that the current Labour Party holds a position as far left as any Labour Party over the last 50 years. There has already been talk of rent caps, repossessing vacant properties for the homeless and increasing taxes for property investors. As a consequence, even though still highly unlikely, property investors will now need to factor in a potential Labour government in the short to medium term. What challenges lay ahead in the event of a change in government?
Can property taxes rise any further?
In reality, the Conservative Party has managed to push through an array of property tax increases, and the introduction of new charges, with relatively little fuss. In many ways the Conservative Party has used the cover of a “harsher” Labour Party to its benefit. This goes against what the Conservative Party has stood for over the years, capitalism, investment and businesses. In many ways we are still paying the price for the 2007/8 economic collapse as governments around the world look to maximise tax income with nothing off limits.
Could Labour deliver on all property policy promises?
If we take a step back, it is fairly obvious that the Labour Party will not be able to deliver on promised extreme policies in relation to property investment and taxes. These policies have caught the eye of disgruntled voters, they have created an “us and them” scenario and for some reason property investors are seen as the devil incarnate. Business is business at the end of the day and the UK is in dire need of additional social housing and private rental properties. Biting the hand that feeds you, in the shape of property investors, may grab the attention of voters but in reality it is a regressive policy.
We would likely see a new Labour government tinkering around the edges; introduce new taxes which would be irrelevant and partially delivering on promises. In reality the party would need to maintain a working relationship with investors, stock markets and money markets. While it is fair to say that property investment under a Labour government would be more costly and potentially more difficult, the nightmare scenario is unlikely to come true.
It seems highly unlikely that the Labour Party will shoehorn itself into number 10 Downing Street without a general election. There would have been riots on the streets if the Conservative Party had suggested such a move without first going to voters. At this moment in time it is difficult to see how Brexit will pan out, the future of Theresa May or indeed the short to medium term tax regime. However, while political upheaval is having a detrimental impact on the economy, not to mention Brexit, near rock bottom interest rates will ensure there is significant funding to at least take the edge of any economic shocks.