What will a hung parliament mean for the housing market and UK landlords?
With the UK waking up to the shock news that the General Election has resulted in a hung parliament, and Housing Minister Gavin Barwell losing his seat in his constituency, what is next for the housing market?
Prime Minister Theresa May took a gamble. Her decision to call a snap election in April was widely viewed as a risk, but a calculated one. May wanted to strengthen the Conservative majority and lead Britain through the Brexit process. However, her gamble didn’t pay off; instead it has weakened the government, the economy and has caused further uncertainty in an already uncertain housing market.
What is a hung parliament?
In order to form a majority government, one political party must win 326 seats. If they do not, as is the case with the Tory party who only won 318 seats, then a hung parliament is called, where no one party has an overall majority to govern the country.
What will happen?
Theresa May has announced that she will form a government, having sought the help of the Democratic Unionist Party, in order to secure the required 326 seats needed to pass laws in the commons.
Bye Bye Barwell
Housing Minister Gavin Barwell, seen by many within the sector as a positive force for the housing crisis, lost his marginal seat in the Croydon Central constituency to Labour’s Sarah Jones. This begs the question as to who will replace him.
The housing industry reacts
Housing industry figures came out in support of the work that Mr Barwell has done during his brief time in the role, and highlighted how vital it is that the government addresses the housing crisis head on.
Chartered Institute of Housing chief executive Terrie Alafat CBE said: “We’d like to thank Gavin Barwell for the work he has done as housing minister, we appreciated his willingness to listen and work with the sector. That kind of approach is the only way we will be able to address the country’s housing challenges and build the genuinely affordable homes that we so desperately need.”
Short-term uncertainty is likely
While it is too early to have any real answer on what this hung parliament could mean for the housing market, it has caused plenty of unease on a national scale, and the repercussions of the election result will no doubt be seen and felt across the housing sector for the remainder of 2017.
Andrew Turner, chief executive of Commercial Trust believes that once the Prime Minister has formed a new government, it will mostly be business as usual:
Clearly the hung parliament will have repercussions in the short term. Firstly, financially, as the pound suffers against the Euro and Dollar, and secondly, as the political uncertainty seeps into the public’s confidence levels.
However, I do not see why anything will change in the housing markets long term.
Once a new government has been formed, house prices will continue to rise and fall as they have done for many years in their cyclical fashion and although transactions may slow down in the aftermath while the dust settles, it will soon get back on track.
The government will continue to push ahead with their housing pledges, largely outlined in the Housing White Paper but there is unlikely to be any respite for the buy-to-let sector.
The main focus for many in the housing sector will be the continued Brexit negotiations, which I think will have a greater effect on the housing market than this election has.
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.