I must get asked 3 times a day at the moment what I think will happen if there is a change of government. People are stressing, thinking, waiting, contemplating and above all procrastinating. Some people are using it as a great excuse not to get into the market and are putting investing on the back burner because of fear and using the election as an excuse so they don’t feel bad.

Firstly, I want to say that I am not here to try and influence anyone’s political decisions. I am just looking at this purely from an investment perspective.

If there is a change of government and Labour gets elected, they are going to stop negative gearing on second hand property only. Therefore if you do go and buy a second hand property that property will cost you significantly more out of your cash flow then it would if you have built new because you are not getting any tax deductions. And tax deductions make up around 25 – 30% of the total cash inflows from property. How will that have a knock on effect?

The truth is that people will and need to invest. Unless you are on a very low income and can transition from that low income into pension (which is welfare) , then you need to invest to have assets to support yourself in retirement.

People really have 2 options. Property or Shares. Most people will choose property.

Now, these people wanting to invest in property will only build new so that they are entitled to tax deductions. What do you need to build a house?? Land!
Therefore I can see the price of land going up in the next few years.

Other than that I don’t really think that much else will happen. You may see a drop in values of second hand properties but I think investors that are buying new wont get any discounts because the price of land will rise.

If you are looking to get into the market and buy and hold, the safest and best cash flow would be to buy new.