Conservatives the party for landlords

Conservatives the party for landlordsAs we approach the general election, in just over 30 days, it seems as though the majority of landlords believe the Tory party will best represent their interests. A recent survey showed that 51% believe David Cameron would be most beneficial to the rental sector with around 45% of those polled confirming they will vote Conservative in May. When you compare this with just 19% of landlords who plan to vote Labour this does perhaps highlight the political persuasions of the property investment arena.

Why are landlords in favour of the Conservative party?

While there is no doubt that UK is in the grip of a long term property boom, despite the short term peaks and troughs, it is proving more difficult for first-time buyers to climb onto the ladder. As a consequence, more and more people are now looking to rent property which is placing upward pressure on rents. This has led to something of a political spat which has split landlords and tenants right down the middle.

In simple terms the Labour Party is looking to introduce an array of restrictions which would tamper with the free-market economy of the rental market. Ed Miliband has confirmed there would be greater regulation, rental increase restrictions and he would look to force landlords to offer tenants more secure terms. The simple fact is that the Tory party is happy to let market forces dictate prices, both in terms of property values and rental levels, while Labour is looking to lurch back to restrictive practices.

Should there be more regulations?

The simple fact is that you cannot have a free-market economy and then look to restrict growth/demand/income in specific investment markets. If the Labour Party was to gain power and push through its threats to regulate the rental market then this would reduce investment returns, increase the perceived risk and scare many would-be landlords from the market. This would have the knock-on effect of restricting the number of properties available for rent which would itself lead to upward pressure because of an imbalance in the supply/demand ratio.

The UK property market as a whole is turning into something of a political conundrum because while short-term assistance for first-time buyers has been welcomed, this has the impact of increasing demand and therefore pushing prices further away from future first-time buyers. The simple fact is that the state cannot go on subsidising the purchase of property forever and a day.

What is the solution?

The simple solution is to build more properties, with a focus on affordable properties, right across the UK with figures suggesting annual new build numbers are tens of thousands short of where they should be. It would take a brave political party to open the floodgates to new property builds, reducing much of the red tape currently strangling the sector, because in theory this would spread demand across a wider array of properties. This in turn might impact the upward pressure on UK property prices and the feelgood factor which goes with a buoyant property market.

It will be interesting to see if the victorious party in the forthcoming election actually follow through with their strategies for the UK property market.

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>