What will the General Election result do to the Hampstead Property Market?

Posted on May 5th, 2017.

After the sudden announcement of the Conservatives for a snap General Election. Modern political wisdom has urged caution on Prime Ministers calling early elections with the last one being in 1974, under the leadership of Ted Heath. This was largely in response to the Oil Crisis that followed the Arab-Israeli war, the three day week and the industrial action taken by the National Union of Miners. Some 43 years later, the world is a different place, though Theresa May and her party are keen to get the mandate from the British Electorate, largely driven by the main political issue that is Brexit.  Such potential issues and possible uncertainties haven’t lifted the cloud from the Hampstead property market. When an amalgamation of tougher lending conditions, a natural correction after the strong recovery in Hampstead property prices in 2013/14, political uncertainty ahead of a General Election slows demand as we saw back in 2015 when David Cameron was elected.

Against the back drop of several changes to the London property market with Stamp Duty revisions, Right to Rent Checks and changes in Taxation Rules that came in only last month, some Hampstead   buy to let landlords were waiting to see how these new policies would be implemented before they committed themselves to buying more property for their buy to let portfolio.

So, where next for the Hampstead property market?  Well, according to the latest figures released by the Office of National Statistics (ONS), inflation is at 2.3 %, it’s been steadily increasing since 2015. The Bank of England has no reason to raise interest rates for the foreseeable and is now at a historic low of just 0.25%. As mortgage rates are at their lowest levels, landlords with large deposits will now be wooed by the mortgage companies with their low rates.

You see, over the past couple of years, Hampstead landlords have benefitted from a booming local job market. Unemployment in Hampstead and Kilburn has dropped to 1.8 % of its population as a year ago, 1810 people were claiming unemployment benefit compared to today’s 1,720- Source Office of National Statistics (ONS)

With more jobs and better pay, as the level of rents is directly linked to tenant’s wages, there has been an increase in the rental prices tenants paid in the past 2 years.  This has now started to bottom out as there is a surplus of rental property available since last year with many tenants moving their focus away from London.

Some landlords might be nervous about Tory’s plans for the housing market over the next five years in terms of tenant demand for their rental properties. One plan is for Housing Association tenants to have the right to buy their property. These kind of tenants were never in the private rented sector and will actually increase the supply of properties in the housing stock in decades to come. The Government ‘Help to Buy Scheme’ has only helped to buy one Hampstead property since April 2013. Considering 612 properties have changed hands in the last year alone in Hampstead, a fall of 10.5%, I don’t think it has made a huge difference to our local property market.

Source- Land Registry 

The biggest matter, when it comes to tenant demand of rental property going forward, comes from the shift in the mindset and attitudes towards renting itself. Twenty years ago you were seen as a second class citizen if you rented a property. In Hampstead, as in the rest of the UK (apart from Central London areas of Marylebone and Mayfair), renting continues to offer good value for money for tenants. If you are an existing landlord in Hampstead   or thinking of becoming one (or as we like to call you  … a FTL  … a ‘first time landlord’), then I must suggest you seek out specialist advice and  opinion. Like many agents in Hampstead , we will happily give you our opinion on the current state of the  market and the advantages/disadvantages to investing in the Hampstead   property market if you pop into our offices.