The idea of Jeremy Corbyn being handed the keys to number 10 Downing Street has been headline news for some time now. There is no doubt this has split the electorate down the middle and if we were to see a snap election, as has been rumoured, it would take a brave person to call the result. In the event that we do see a Labour government within the next 24 months, should property markets be concerned?
Labour Party conference
The Labour Party conference in Liverpool has provided a feeding frenzy for financial journalists. We have seen suggestions that companies employing more than 250 people would be forced to hand over 10% of their shares to workers, plans to double council tax on second homes and now we have suggestions that section 21 eviction notices could be scrapped. As ever, there seems to be a general thread amongst the UK media suggesting that UK property investors should be scared of a potential Labour government. Is that fair?
Plans to increase the rights of tenants in private rental accommodation have been on the cards for some time now. In reality, the Conservative government has already begun this process much to the annoyance of many buy to let investors. Section 21 eviction notices, often described as “no-fault” evictions, are commonplace across the UK except Scotland. As residential tenancies are effectively open-ended in Scotland, landlords will be required to use other legal procedures. However, the Labour Party has today announced plans to end the use of section 21 eviction notices.
As we touched on yesterday, the Labour Party has announced plans to double council tax for those with second homes. There is also a suggestion that the historic domestic rates system will return, increasing the cost of local authority services to those at the higher end of the house price bracket. It is also inconceivable to think that the Labour Party will not at least tinker with current tax instruments relating to property investments.
While rent controls were mooted by the Labour Party just a few months ago, there has been little talk of such a movement during the ongoing Labour Party conference. It may well be that Jeremy Corbyn will announce plans towards the end of the conference but so far very little word on rent controls. As dye in the wool Labour Party members shout for rent controls, is this something that Jeremy Corbyn can ignore?
Markets do adapt
On the surface, there is a lot to be concerned about with regards to property investment in the UK under a Labour government. In reality, we have been here in the past and markets have learned to adapt. Quite how they would adapt under a Jeremy Corbyn led government will be interesting because this is the most left-wing Labour Party we have seen for many years.
Whether Jeremy Corbyn will simply be the figurehead to open the door to number 10 and then be swamped by socialist supporters pushing forward remains to be seen. What we do know is that the next few years could be challenging with a government leaning heavily towards the left and the UK still split over Brexit. While investment markets do learn to adapt, under a Labour government the next few years could test this resolve to the max.