The months and years following the EU Referendum in June 2016 have been some of the most eventful and significant in Britain’s modern political history. That ballot, two subsequent elections, and several tense parliamentary votes helped create a febrile atmosphere that at points seemed like over-boiling.
Thankfully, since the election in December, the fever pitch has dulled, and the political landscape appears to be returning to a calm state. Boris Johnson’s successful clinching of the first Conservative majority since the 1980s now allows him to govern with more confidence than his predecessors.
With no election likely until the middle of the decade, renewed consistency has buoyed confidence amongst investors. The stock market is rallying and there has been a surge of activity in the property market. The so-called Boris bounce has inspired a new wave of confidence that shows no signs of slowing down anytime soon.
In a bid to understand how investors have responded to recent political events, and their outlook for 2020, FJP Investment recently surveyed more than 750 UK-based property investors. In short, the results are optimistic and positive for the UK property market.
The UK property market has struggled with reduced housing stock over recent years, leading to a large amount of unfed demand. The investors we spoke with understood this, and thereby expressed significant support — to the tune of 70% — for a new surcharge on foreign purchases. The theory goes that by disincentivising foreign buyers, more supply will be available domestically, making prices more affordable.
Many investors also thought that for new builds to truly meet the huge demand for new property in the UK, they must be highly marketable. As such, 68% of those asked expressed support for giving local people more input into the design of new developments. Stakeholder support tends to make new builds more contextually appropriate and appealing to prospective buyers, so this could well be a prudent policy.
However, it’s not just property that investors think the Conservative Party has got the right policy on, but also their broader economic approach. According to the FJP Investment research, 59% support the freezing of income or capital gains tax over the course of the current parliament. The former could well make investments more affordable, thereby helping to encourage the market in relatively uncertain times.
As such, it’s clear that Boris Johnson and Sajid Javid’s proposed approach to the property market has been well received by investors. Increasing the potential of UK property, and helping people get on and move up the ladder, will hopefully be a central theme for this government come the Spring Budget on 11th March. Indeed, good signs are already emerging; the chancellor recently announced a new construction strategy to be rolled out alongside the budget — evidence already of joined-up, coordinated approach to the sector.
Theory and practice are not one and the same, and many of the investors we spoke to were concerned that despite the Government’s big plans, they might struggle to implement their proposals.
Tackling societal problems such as the housing crisis, economic growth or climate change requires a large amount of planning and focus. Despite recent advances with Brexit, a majority (58%) of those we spoke to thought that the Government was still focusing too much on it and not enough on domestic areas. Negotiations will be ongoing throughout 2020, so this could well still be the case for the foreseeable future.
More specifically, many of those asked thought the Government’s aims for the property space were unfeasible. 61% thought the Government was likely to miss its housebuilding target of a million homes before the end of the parliament. It’s difficult to blame them; governments of all kinds have set huge targets and missed them, and Boris Johnson’s target is comparatively high. For many investors, it seems like the UK’s dearth of housing stock might never be solved.
In many ways, it is clear that the Government still has much to prove. Property investors support the proposed plans of the Government, and hope they are in position to act on them over the coming years. I now look with interest to the Spring Budget, where the Prime Minister and his cabinet can reassure investors and firms that the promises originally touted will be met with policy and funding.
Jamie Johnson is the CEO of FJP Investment