Well, it was certainly never going to be a boring election. And it didn’t disappoint. But what does this mean for you, your tenants, and your portfolio? Does this signal four years of upheaval and uncertainty, or will the Conservative’s promise of ‘Strong and Stable’ leadership be able to flourish, despite the decidedly wobbly start?
After weeks of political mud-slinging, policy promises, controversy and tense dinner party analysis, the big day finally arrived, and as a nation we certainly delivered.
With a huge turn-out of voters – the highest in 25 years - especially in the 18-25 age range, whatever the politicians did, it they certainly provoked a reaction. However, unfortunately it didn’t quite give the conclusive answer the country needed…
With the final votes coming in as 318 for the Conservative Party, 261 for Labour, 35 for the SNP, 12 for Liberal Democrat, 0 for UKIP, 10 for the DUP and others making up 13 seats, no one party reached the 326 seats required to win an outright majority.
(NB: at the time of writing Kensington and Chelsea were yet to announce, however it was believed that the constituency had moved to a Labour vote, taking the total to 262)
So, the nation, for the second time in a decade, woke up to a hung parliament – only the third time since the 70’s.
What’s the immediate position?
In the immediate aftermath of a hung parliament, the controlling government usually remain in power whilst the options are considered.
There are two options in this instance:
The Conservative Party leader Theresa May attended a meeting with the Queen at Buckingham Palace on Friday afternoon, to seek permission to form a coalition government with the Northern Irish Democratic Unionist Party, thus creating a small majority. Whilst this move means that the UK will be moving forward with a Conservative government, it is still good news for anyone who didn’t support the Conservatives or any of their more controversial policies - this tiny majority will make it very difficult for the governing party to see the passing of any less popular legislation, as opposition parties still make up a huge percentage of parliament.
This swift choice was needed. Parliament meets on June 13th, at which point, should Mrs May not have come to the conclusion as to how the Conservative party were going to move forward, Jeremy Corbyn, leader of the second biggest party – Labour – would have been given the opportunity to take the reins. Mr Corbyn would also have had the option to create a minority government, but with so much discourse between the Labour and Conservative policies, to ensure any policies were passed he would have to ensure backing by other parties, such as the SNP and Green Party, who share Labour’s views on key issues such as Brexit. They also share major policies with the Liberal Democrats, however after a major finger-burning in the last coalition government in 2010, the Lib Dems have gone on record stating their unwillingness to ever enter another coalition, so whether they would pledge their support is uncertain…
There is, in theory, a third option - although it would be decidedly unpopular if Brexit voting is anything to go by. If nobody could have sorted themselves out, well, we’d have been sharpening our pencils again, and heading back to the ballot box.
Housing minister Gavin Barwell has lost his Croydon Central seat, so once again we will be looking at a shake-up. Not exactly the strong and stable building blocks landlords were hoping for, but as the sixth housing minister (in six years) takes to the floor, what exactly does this mean for the private rental sector?
The overriding thought amongst experts is that housing will take somewhat of a back seat. Amid party wranglings, Brexit timetable negotiations, the potential of a leadership battle and ongoing security concerns, the housing crisis has somewhat taken to the shadows.
In addition, with the Conservatives (and DUP) at the helm, there is now the added issue of getting laws passed with a minority number of seats. The Conservative manifesto promised the following policies which are likely to impact landlords, we’ve suggested whether or not these are likely to be well received in the newly formed, slightly fractured, Westminster:
- Build "fixed-term council houses", sold privately after 10-15 years with automatic Right to Buy for tenants: Labour and Lib Dem pledged to suspend Right to Buy policy so this is unlikely to be a popular option
- Build one million homes by end of 2020 and 500,000 more by end of 2022: All parties pledged to build more homes, but there may be debate on whether they should be socially rented, council or housing association
- Build 160,000 houses on government-owned land: All parties are keen to build, likely to garner support if it removes spotlight from the controversial ‘Greenbelt review’
- Implement the Homelessness Reduction Act to halve rough sleeping: Labour’s policy to build 4,000 new homes for people with a history of rough sleeping was a popular policy, so this may be well received
It’s not unreasonable to expect that the announcements that we heard at the recent Housing Whitepaper will still stand true. These include:
- The national planning framework is being adapted to encourage local authorities to plan proactively for Build to Rent schemes, and allow B2R developers to offer private rental homes as well as other types of affordable housing: Every party was vocal in their plans to build more properties, although they do differ in the sort of properties they believe the country needs.
- Banning letting agent fees; Every party is on board with this one! Finally, something everyone agrees on (except many landlords, who stand to be in line for increased agency costs). Possibly expect to hear more about this at the November budget.
- Implementing Housing and Planning Act 2016 – promise to bring into force the plans to improve standards in the PRS: The SNP, Green Party and Liberal Democrats were all very vocal on the need to bring firm standards into the industry, so this is a policy that is likely to be backed throughout the House.
Traditionally, the aftermath of a general election sees the reinvigoration of the housing market, with people seemingly excited and filled with renewed trust in the years ahead. This typically lasts for four to six months, and we see a boom in buying and selling, which in turn has a positive impact on the lettings industry.
However, with so many factors up in the air, as well as a tangible lack of property stock, this election may be somewhat different to the history books. The snap election has dampened the ardour of even the most passionate purchaser, and according to a survey by the Royal Institute for Chartered Surveyors (RICS), May saw sales drop for the second month running. This was the worst result since July 2016, immediately after the UK voted to leave the EU.
There was a moment of upset on Thursday night, as the pound plummeted 1.4% against the Euro, and 1.7% against the Dollar as exit polls were released, however this isn’t too much to worry about, everything is expected to right itself - so unless you’re planning a holiday in the next week or so don’t panic.
Other than leaving you a bit short changed on your holiday money, what impact will this week’s dramas have on your wallet overall? With the Conservative’s conservative spending budget still be in place, or will they be forced to consider some of the other parties more frivolous policies?
The Conservative manifesto promises which may have had an impact on your bottom line included:
- Rule out increases to VAT: Labour and SNP pledged no increases to VAT, so this will not be a popular policy
- Stick with current plans to raise personal tax allowances: The Chancellor (at the time of writing this is Phillip Hammond, but anything could happen!) is likely to face some jeering from backbenchers, however it’s unlikely that this will be an unpopular policy with the people, so other parties are likely to give it their support.
- Cut corporation tax: Not popular. Labour actively wanted to push corporation tax to 26% by 2020/21, the Lib Dems wanted to reverse the planned cuts, Plaid Cymru wanted independent control – however the DUP also want to reduce Northern Ireland’s corporation tax to 12.5%, so at least the Conservatives allies are in line with them!
At the start of the campaign, many people considered this to be the ‘Brexit Election’, however, as the days wore on the big question seemed noticeably absent from many of the impassioned speeches and manifesto announcements by the major parties.
However, how we stand at the beginning of a new political term, the question looms large – how can a hung parliament manage Brexit negotiations, and will they have anywhere near as much clout?
Guy Verhofstadt - the Brexit negotiator for the European parliament - is doubtful, and has been quoted as saying how he ‘fears that the outcome of the election will make the already complex negotiations even more complicated… I expect even more uncertainty now.’
As it stands, the answer is until the creases are ironed out, it is likely that any negotiations will be put firmly on the back burner, delaying negotiations which were due to start on June 19th. Whilst there is no stopping the Brexit train now Article 50 has been triggered, it is likely that the Prime Minister will want to ensure that any collaborative measures with the Democratic Unionist Party – are signed, sealed and settled before proceeding with the tricky task of negotiating the UK’s place in the European arena. Whilst they share many Brexit-beliefs with the Conservatives, the final details could prove tricky, understandably, due to their geographical location, the DUP are keen to ensure soft borders with the Republic of Ireland.
Although the waters are muddy at the moment, one message is loud and clear. We are a nation that is desperate for change – whether that is the complete about-turn of Corbyn’s Labour, or the Brexit-promises of May’s Conservatives, everyone has a desire to see changes in the country – and as a nation we’ve certainly made that happen this week.
Whether these changes will bring good news for the legions of landlords who play a vital role in tackling the UK’s housing crisis is yet to be seen, but one thing is certain, times are a-changing.
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