What Does Sir Keir Starmer’s Resignation Mean for the UK Property Market?
Keir Starmer’s resignation will not automatically cause house prices to fall or mortgage rates to rise, but it does inject another dose of uncertainty into the UK property market
The biggest issue is not who occupies Number 10. It is how financial markets judge the economic policies of the next Prime Minister and Chancellor.
Mortgage lenders price many fixed rate deals using swap rates, which reflect expectations about future interest rates. If investors become concerned that a new government will borrow and spend significantly more, gilt yields and swap rates could rise. That would make it harder for lenders to reduce mortgage rates and could even push some deals upwards.
So far, the immediate market reaction has been relatively restrained. However, buyers and sellers dislike uncertainty, particularly when it involves taxation, borrowing and the cost of mortgages. Some households may pause until the leadership contest and future economic direction become clearer.
An Andy Burnham government could also bring longer term changes to property taxation. He has previously supported reforming council tax and stamp duty, potentially replacing them with an annual tax linked to property values.
Scrapping stamp duty could encourage more people to move and improve mobility within the property market. However, an annual property levy could increase costs for some homeowners, landlords and owners of more expensive homes.
For now, this wont stop the property market. Serious buyers will continue buying and motivated sellers will continue selling.
Yet the speed and confidence of the market will depend on one thing above all else: whether the new government can convince financial markets that its economic sums add up.