The first quarter of 2015 saw the property industry suffer from the uncertainty surrounding who would eventually hold the keys to Number 10.
With no clear leader in the polls, there was every chance of a hung parliament resulting in ideological political wrangling that would continue once a government was formed.
The prospect of a mansion tax was affecting the residential property market. Sales of properties with a value of more than £2m were generally not going through, although in some cases offers were being made that took into account the possibility of a mansion tax. In particular, the central London market had ground to a halt.
The first general election that happened in my business career was in 1964. The Conservative party was still popular with some of the new breed of buyer, but not all. As you can imagine, being the swinging ‘60s, these buyers came from the entertainment world, design and advertising, as well as the legal profession and banking – similar to 2015.
Back then, a lot of the buyers were not overly concerned about politics but in the main were convinced we were going to see a Labour government for only the second time since the second world war. There was a mood of caution as we all felt that there were going to be a lot of changes. Although sales were still being achieved, prices were depressed. Vacant houses in Parsons Green, SW6, struggled to sell at £10,000; they are now selling for £3m.
Some residential investors were feeling concerned that the Labour party would threaten to tinker with rents and security of tenure. Once they started, it was unknown how far they would go.
Many of the older property people (myself included) remember Harold Wilson’s Labour government of 1964, which brought in a very tough and bureaucratic rent act that in a stroke killed off private landlords continuing to let vacant flats and houses. This, in turn, created a tremendous shortage of rental accommodation.
Against this background of political uncertainty, auctioneers took to their rostrums in April wondering what the effect of the forthcoming election would have on the auction market.
The results were very positive; most auctioneers achieved sales of 85-90% of the stock offered and I know that at Andrews & Robertson the prices achieved were way above the reserves. There was strong demand from residential buy-to-let investors, many of whom were new to our auction room, and who were obviously not overly concerned about the election.
By the time of our June auction, a majority Conservative government was in place and the spectres of a mansion tax and rent controls had been removed.
With a continuation of record-low interest rates and an increasing demand for rental properties, confidence was very strong across all sectors. Our June auction saw Andrews & Robertson post our strongest results of 2015, so far, selling 89% of our catalogue.
Looking to the coming months, we are seeing increasing numbers of buyers keen to take advantage of the strong yields available in the residential letting market, as they feel there is now a clearer sense of housing policies over the foreseeable future.
It is good to see investors competing for retail investments – even for buildings the residential parts of which have been sold off on long leases. These types of investments are achieving much higher prices now than they would have done in recent times.
I am confident that the property market will continue to be strong for the remainder of 2015 and beyond, as Britain’s economic prospects continue to look positive. UK credit rating agency Moody’s expects the economy “to continue to expand at rates above 2% for the next several years, as the effects of the financial crisis fade”.
For those who have cash, or can raise adequate funding, auctions will continue to be a popular way of buying property, either as an investment or as a home.
Robin Cripp is chairman and senior auctioneer at Andrews & Robertson
