Theresa May’s huge political gamble to call a snap General Election backfired disastrously, as the Conservatives lost 23 seats to Labour, stopping any chance of a majority vote, shocking the country with a hung parliament. A hung parliament is the result when no party gains the 326 seats needed to form an overall majority in the House of Commons, but what happens now?
There are several possible results that could come from a hung parliament; a coalition government like we had back in 2010 with the Tories and the Lib Dems, a minority government or a re-election.
Theresa May will remain the prime minister, and the Conservative government stays in office while it is decided who will form a new government unless she decides to resign.
As two parties with the most seats, Theresa May or Jeremy Corbyn could opt to go it alone and form a minority government, meaning they would rely on the support of other parties to have their laws passed. Or, which is looking more likely now, they could enter negotiations with party leaders to try and form a coalition government. Theresa May will visit Buckingham Palace at 12:30pm today with ‘understanding’ of DUP support.
Gaining the most seats, May will have the first opportunity to create a majority. If May proves unable to create a majority, Corbyn will become the prime minister, although Corbyn doesn’t need to wait until May has exhausted her options and can begin to put a deal of his own together at the same time.
Currently, the first deadline to form a government is Tuesday 13th June, when Parliament will meet for the first time. May has until this date to put a deal together to keep herself in power or resign, but to resign, she must be confident that Corbyn can form a new government and she can’t. She may decide to wait until the new Parliament to see if she has the confidence of the House of Commons, and risk relying on the votes of other parties.
If May decides to resign, this will be a key test of whether the Labour leader can form a government.
For most, Theresa May’s announcement of a snap General Election on June 8th came as a bit of a surprise. Investors and property experts prepared for more uncertainty, questioning whether the market would come to a complete standstill until after the election.
Looking back at past elections, it’s easy to see why some experts believe this could be a possibility – the market had to wait for the 2015 General Election and the ensuing UK Referendum last year, causing uncertainty, disruption and a slowdown in activity.
This time around there is a much more positive reaction. Past trends show a clear correlation between general elections and the level of transactions in the property market, indicating that there will be a dip in activity pre-election. However, unlike previous elections, instead of the usual six month run up to the vote, we only had about seven weeks to wait (even less now). Therefore, consumer hesitancy is likely to have less of an overall impact on transactions.
Not to mention this will be the third big poll in the last three years, so it could be argued that Brits are becoming numb to the uncertainty caused by politics. We think this attitude will counter a standstill in the market as felt in previous years; buyers who are well on their way to purchasing will likely continue, while investors who are at the beginning of their search may decide to wait.
Interestingly, Rightmove has just reported asking prices are up for the fifth consecutive month, so it looks like the election announcement has had little or no impact on the market, at least price-wise.
In previous years, transactions visibly pick up post-election, usually peaking approximately three months after. So, if you’re thinking of selling later this year, you might consider putting your property on the market soon so you don’t miss the mark. Either way, any ambiguity caused by the election will typically be short-lived and as a result, we will have a stable government for the next five years to carry us through Brexit negotiations, which will no doubt lead to a rise in confidence across the board.
Our advice to sellers who already have property on the market is to be patient. There may be a slight drop in interest levels between now and election day, but demand is still outweighing supply and buyers are still keen.
Our advice to buyers thinking of holding off is to look at up and coming areas such as Canada Water - which is due to undergo huge regeneration - to secure your investment.
If you’re curious about the current market and are thinking of selling or renting your property, feel free to contact Brandon on 0203 869 0288 or click here for a free online valuation.