Trevor Abrahmsohn, managing director of Glentree, considers what the residential property market would be like with Jeremy Corbyn as Prime Minister.
In all likelihood, on September 12, Jeremy Corbyn, the cheerleader of the Left and Trotskyites, will be voted, overwhelmingly, as leader of Her Majesty’s Shadow Government without even needing to go through a second round contest.
He is an unashamed hard line Socialist and it is evident that he appeals to the Left Wing supporters in the Labour Party who have scant regard for electoral popularity or, in fact, the reasons why the Labour Party won three notable elections in the past.
Corbyn is quite clear as to how he sees Great Britain and its ‘social ills’ and here are some of the policies that I believe he would institute if he were ever given the keys to Number 10.
- The higher rate of personal taxation would go to at least 50% and beyond. The fact that this would raise less money would be far less important than the idealistic and socialist message that this would generate.
- ‘Son of Mansion Tax’ will be imposed on higher value properties, which are mainly in London, or some other draconian Council Tax which no other Party would have the temerity to impose.
- Non Dom’s will be a thing of the past.
- There will be compulsory purchase of empty properties or a severe tax on these whichever is the most forbidding.
- Tax Relief on buy-to-let investments would disappear immediately
- Corporation Tax would increase dramatically together with sequestration of corporate assets.
- Banks, railways and other utility companies would be re-nationalised as ‘big government’ would be the order of the day.
- He would repeal Clause 4 and any other of Margaret Thatcher’s Union reforms (i.e. secondary striking) which has been in place since the 80s and insured the lowest strike record in western Europe.
- Arthur Scargill and Ken Livingstone would be regular visitors and advisers to Number 10 and beer and sandwiches would be the ‘special of the day’.
- We would have another referendum on Europe with the government, this time, promoting an exit.
- Employment laws would match those in France and Germany if not becoming even more draconian.
So what does all of this mean for property?
Wealthy property investors would leave in ‘droves’ and only those international buyers, who are anxious to live in London (for some specific reason), would buy – the antithesis of what happens today.
Local buyers will be few and far between as they would be terrified to purchase a property that will be highly taxed and, therefore, sellers would out-number buyers immediately following an election with the understandable collapse in values. These would drop exponentially, apart from at low price levels, and would not assist the first-time buyer.
Buy-to-let investors that make up a significant amount of demand would no longer be there and the only purchasers in the middle to higher end of the property market would be those who ‘have to buy’ not ‘want to buy’.
I’m not sure that even ‘bottom feeders’ would be out looking to ‘hoover’ bargains since there will be a deflationary property price spiral where instead of expecting growth in prices it will be just the reverse i.e. why buy today, when you can buy it for less tomorrow?
Property developers will be wary of over-supply and deflation that will affect their ability to raise funding and therefore private new developments will be few and far between. The only active development will be state funded by Corbyn and his ‘merry men’.
This is the apocalyptic scenario that could face us all with a Jeremy Corbyn led Labour Party in power but, thank goodness, the default thinking of the ‘Great British Electorate’ is in centralist policies and they will see through all this left wing rhetoric which is why New Labour and Tony Blair were such an overwhelming electoral success at the time.
Good luck with Corbyn and good riddance!