If Labour’s plans to introduce a Mansion Tax come to fruition I feel that London will be massively at risk
Jonathan Sealey is chief executive of Hope Capital
In the final days up until the general election, it is still anybody’s guess who will end up in power. The mainstream mortgage market seems to have reflected the uncertainty with figures for the first quarter down on last year and fewer houses on the market.
It has been a different picture for bridging and short term lending however with the ASTL figures for bridging showing a continued upwards trend in comparison.
While there may be personal uncertainty, property professionals seem not to have let the election affect their businesses and we certainly, have seen no dip in bridging loan applications from property professionals. While the election is affecting long term residential, perhaps the short term nature of a bridging loan means that the people taking them out feel that it is less risky as there is less chance of a whole scale change to the market in six months or a year.
As a result, no matter what party comes to power, I do not expect an instant change to the bridging market, in fact I expect volumes to continue to rise and once the uncertainty has faded, I feel there will be a surge of activity in long and short term lending markets.
The biggest factor to change this is likely to be the economy. While people can see things improving they will continue to invest in property. If the general election results in whole scale changes in spending then I expect investors and developers to get a little more nervous.
One other thing is clear, if Labour’s plans to introduce a Mansion Tax come to fruition I feel that London will be massively at risk. This collapse has already started due to the uncertainty of the market pre-election and non doms have already started to flood out of the market for high end properties due to charges levied upon them and that part of the market will suffer further. This must be a worry those lenders who lend predominantly in London and the brokers that only serve the capital.
Until the results are known and there is another government in power all markets will be a little jittery, not just the lending markets. Let’s hope that the results are fairly clear cut, as the worst thing for all markets will be a long drawn out period of uncertainty while a coalition is sorted.
