British election may be boon to HK homebuyers
Hong Kong property investors may have much to smile about after Britain's general election on May 6. Opinion polls show a Conservative victory or hung parliament is the most likely result, both of which may provide opportunities for property buyers from the city.
Jonathan Bramwell, the director of homebuyer agency Prime Purchase, said the Conservative Party's commitment to abolishing Home Information Packs (HIPs) would encourage more vendors into the market, because they would no longer need to pay GBP400 (HK$4,739) for them. This would give Hong Kong buyers more property to choose from, he said.
'If the Conservatives win, there will be a bounce and a feel-good factor which happens whenever there is a change of government,' he said. 'Supply levels will increase after the Conservatives win.'
The Conservatives will scrap Labour's new 5 per cent stamp duty on homes of more than GBP1 million.
The Conservatives want minimal regulation of the private rented sector. In a move welcomed by the National Landlords Association, the party has pledged to scrap a law introduced on April 6 that requires landlords to apply for planning permission when letting homes to three or more unrelated tenants.
Britain's landlords overwhelmingly want a Conservative victory. A poll by property portfolio managers Young Group shows 84 per cent support the Conservatives, 13 per cent for Labour and only 3 per cent for the Liberal Democrats.
A hung parliament may mean political uncertainty as parties attempt to form a new government.
'This could be good news for overseas buyers because it could weaken the pound even more, making British property less expensive to buy,' Bramwell said. 'It could also force vendors to sit on their hands, so the supply shortage might worsen.'
The HIPs may be scrapped in a hung parliament, because the Liberal Democrats, a likely coalition partner, are opposed to them. The party's plans for a 1 per cent mansion tax on properties valued from GBP2 million and the desire to cut bankers' bonuses would dampen demand for luxury homes in London and the Home Counties, Bramwell said.
The Labour Party wants tighter regulation of the private rented sector, including creating a national landlords' register. Its legislation to stop landlords from negotiating private deals with tenants for properties let for between GBP25,000 and GBP100,000 a year will come into force in October. It means landlords must hand over a tenant's deposit to an authorised third party.
Young Group chief executive Neil Young warned none of the parties had plans for addressing the most important issue affecting the housing market, a lack of mortgages. Lenders' demands for buyers to have large deposits blocked many from entering the market, he said.
'The typical deposit required for an average price home has rocketed by more than 100 per cent over the past two years to GBP33,883,' he said.
Whichever party wins, the next government may increase taxes to help pay off the national debt, a leading accountant has warned.
Michael Harrison, a partner at accountants Saffery Champness, said some overseas investors might need to set up offshore trusts to avoid taxes on British property in future. 'So far as foreign investors are concerned, all the parties have to be careful in terms of obstacles they put forward in taxes,' he said.
A Conservative victory would encourage more vendors into the market
Sellers would no longer need to pay for the Home Information Packs costing: GBP400