Mon 29 Jul 2019

Boris Johnson is Prime Minister - what could this mean for the property market?

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It’s been expected for a while now, and came as no huge surprise, but Boris Johnson was officially elected as the new leader of the Conservative Party on Tuesday 23 July, taking over the reins of Prime Minister from Theresa May the following day.

There’s no denying that Johnson is a divisive figure, but what could his premiership mean for housing? Below, Balgores Property Group takes a closer look...

Where does he stand on housing?

During the leadership campaign, he said relatively little about housing – but he did attempt to put in the groundwork for some future flagship policies by suggesting he could reverse the stamp duty changes introduced by George Osborne to the high-end of the market.

Discussing his plans for a first budget during the month-long battle to become PM, Johnson identified stamp duty as a ‘problem’ and claimed tax cuts could get the 'locked up' market moving again.

In addition to cutting high-end stamp duty, Johnson also put forward the possibility of cutting tax further at the lower end of the market with the aim of assisting first-time buyers.

“I think particularly in London there is clearly a problem with stamp duty and it needs to be addressed," Johnson told the Telegraph.

“I’m not going to put a figure on how much we’re going to cut but we will certainly be looking to do that because I think actually you can do that in such a way as to increase revenues if you get it right because the market is locked up at the moment.”

In the last week of the campaign, Johnson even expressed an interest in a more radical policy – namely that of asking sellers to pay stamp duty instead of buyers.

A trade body - the Association of Accounting Technicians (AAT) - claimed Johnson is open to adopting its policy of switching the burden of stamp duty to the seller.

The new Prime Minister met with the AAT at the start of July and agreed to examine their stamp duty proposal further, even going so far as to request further information.

“Our long-standing proposal will save the taxpayer £700 million a year by rendering first-time buyers relief redundant,” an AAT spokesman said.

“It will also protect the £9 billion of revenue stamp duty generates as it will still be paid in full, simply by different people. It is also much more progressive as it will be paid on the lower priced property being sold rather than the higher priced property being bought.”

His past pronouncements on housing, mostly made in his Daily Telegraph column, at fringe meetings or in off-the-cuff remarks, have suggested an aversion to rent controls and intervention in the private rented sector, a favouring of home ownership over renting and a desire for beautiful garden towns.

He’s also made clear in the past how he wants fewer affordable houses on new-build schemes, to ensure more housing is built of all kinds, without constraints being imposed.

What was his housing record like as London Mayor?

While he won praise from some for his housebuilding record in the capital, others say he failed to meet his own pledges for affordable housing and failed to adequately fund social housing. He has also been criticised for the selling off of City Hall land to luxury developers, prioritising high-end developments for the wealthy ahead of homes for average Londoners.

Although even his critics concede that he may have out-built Labour during his eight-year tenure as London Mayor (figures from City Hall suggest that 94,001 homes were built during his two-term spell, more than Labour predecessor Ken Livingstone), question marks have been raised about how many of these homes were genuinely affordable.

The definition of affordable housing was broadened in 2011, with the inclusion of affordable-rent housing, so it’s difficult to directly compare the housebuilding records of Johnson and Livingstone.

Additionally, Johnson reduced the target for affordable housing in 2011 from an average of 23,300 a year to 13,200 a year.

What about Brexit?

Like Theresa May before him, Brexit is likely to be the thing that defines Boris Johnson as Prime Minister. While May tried to put ‘fixing our broken housing market’ as her main priority, she was ultimately consumed by Brexit – trying and failing three times to get her Withdrawal Agreement Bill through Parliament.

Johnson has yet to make any grand statements about his main goal as PM, but he too is likely to be immediately involved in attempts to break the Brexit impasse. During the campaign, he repeatedly said he was prepared to leave without a deal on 31 October, ‘do or die’.

But the Office for Budget Responsibility (OBR) recently suggested a no deal Brexit could cause a £30 billion a year hit to the UK economy, while Philip Hammond has suggested it could end up costing £90 billion. If these predictions were to come true, the economy – and subsequently the property market – could be severely affected.

Others have previously warned that a no deal Brexit could lead to a recession and a housing crash, of the like not seen since 2007-8, while an end to free movement of people could see the number of renters from EU countries fall dramatically.

On the other hand, others argue that a no deal Brexit or a deal finally passing through would give some much-needed certainty, stability and momentum to a market that has been left flagging by all the recent indecision.

Some also suggest that Brexit has already been priced into the market by now, and that the industry will be able to adapt and cope with any new landscape, in the same way it has batted off uncertainty and issues in the past.

It will only become clearer over time what Boris Johnson’s ascension to No 10 will mean for the housing market, but – as was the case with his predecessor – it’s set to be a bumpy ride with so many variables at play.

To find out more about the estate and letting agency services we offer in Kent, Essex and East London, you can contact us at one of our many branches.

We also offer free and instant online valuations for both lettings and sales to give you a better idea of what you could be charging in rent and what your home could be worth in the current marketplace.

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