What could a new Prime Minister mean for the property market?

News at Kings Group | 01/08/2019


Unless you’ve been living in a cave for the last few weeks, you will know by now that Boris Johnson stormed home in the election to become the new Conservative leader and, more critically, the new Prime Minister.

Johnson is a famously controversial figure, but what could his victory – and getting the keys to No 10 – mean for the housing market?

Here, Kings Group takes a closer look…

What does Johnson have to say about housing?

Housing didn’t form a major part of his leadership campaign, although he did make some interesting comments regarding stamp duty. He suggested he could reverse the stamp duty changes introduced by George Osborne at the high-end of the property market, as well as potentially cutting the tax further at the lower end of the market to help first-time buyers trying to get on the property ladder.

Currently, first-time buyers purchasing a home worth up to £300,000 pay no stamp duty, while for properties costing up to £500,000 buyers pay no stamp duty on the first £300,000. But there has been talk of scrapping stamp duty entirely for all first-time buyers, regardless of the purchase price of their first home. 

While discussing plans for his first budget during the month-long fight for the top job, Johnson highlighted stamp duty as a ‘problem’, claiming that tax cuts could get the 'locked up' market going once more.

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

Even more radical stamp duty plans, backed by Johnson, were mooted in the final week of his campaign, with possible proposals for sellers to pay stamp duty instead of buyers.

A trade body - the Association of Accounting Technicians (AAT) – said that Johnson had said he was open to adopting its policy of switching the burden of stamp duty to the seller.

At the start of July, the new PM met with the AAT and agreed to scrutinise its radical stamp duty proposals further, even going so far as to request more information.

“Our long-standing proposal will save the taxpayer £700m a year by rendering first-time buyers relief redundant,” a spokesman for the trade body 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.”

Away from stamp duty talk, his previous declarations on housing, predominantly made in his Daily Telegraph column, at fringe meetings or in off-the-cuff quotes and statements, suggest he dislikes the idea of rent controls and intervention in the private rented sector, favours home ownership over renting and holds a strong desire for the creation of ‘beautiful garden towns’.

On the latter point, Johnson has previously endorsed a recommendation from the centre-right Policy Exchange think tank to create a ‘Department for Growth’ with the task of delivering 15 ‘beautiful’ new towns on London’s outskirts.

In the past he has also made statements about how he wants fewer affordable houses on new-build schemes – something he implemented as London Mayor – to make sure that housing of all kinds is built in greater volume and without barriers being put in the way.

Two other policy proposals – which could have an indirect impact on the housing market – is a promised review of the controversial £56 billion HS2 scheme and the acceleration of the rollout of full-fibre broadband to every part of the UK by 2025.

How did he fare on housing at City Hall?

Unusually for a new PM, we can already judge Boris Johnson’s record in another major role – namely his two-term tenure as Mayor of London between 2008 and 2016.

Although some have praised him for his housebuilding record in the capital, critics suggest he failed to meet his own targets for affordable housing and didn’t adequately fund social housing. Additionally, he was criticised for selling off land belonging to City Hall to luxury developers, prioritising developments for the affluent ahead of homes for ordinary Londoners.

Even his critics would concede that he may have outbuilt Labour during his eight-year tenure as Mayor (with 94,001 homes built during his two-term spell, more than Labour predecessor Ken Livingstone, according to official figures), but there are question marks over how many of these homes were genuinely affordable or aimed at your average London resident.

It’s also important to remember that the definition of affordable housing was broadened in 2011 by Johnson, with the inclusion of affordable-rent housing, which makes it difficult to directly compare the housebuilding records of the first two Mayors in City Hall.

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

All change at MHCLG

In one of the most brutal reshuffles ever – during which 17 ministers were either sacked or resigned – the department responsible for housing got a significant makeover. Out went former Housing Secretary James Brokenshire and Housing Minister Kit Malthouse, replaced by the relatively unknown Robert Jenrick and the much-better known Esther McVey respectively.

What’s more, Heather Wheeler – who as junior housing minister was responsible for much of the government’s heavy lifting on housing, from the tenant fees ban and leasehold reform to the potential ban on section 21 and the planned reforms of the home buying process – was moved to the Foreign Office and replaced by Luke Hall, MP for Thornbury and Yate.

Brokenshire and Wheeler, in particular, put in a lot of groundwork on future housing proposals. Whether the new team, and the new PM, sticks to this is less clear. There are also concerns about the impact a possible no-deal Brexit – which Johnson has said he is willing to contemplate if a deal can’t be reached with the EU – could have on the property market, with opinion divided over how much of an effect it will have.

Some argue it will be disastrous, others argue the property market will cope with the new landscape in a similar way to other major changes of the recent past.

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