‘A week is a lifetime in politics’ said Harold Wilson - never has a truer word been spoken. With the election a week ago resulting in a hung parliament with no party commanding a clear majority, the machinations that have taken place over the past 7 days have thrilled the political junkies and dominated the buzz around the coffee machines.

So in this dispatch, we will focus on the potential implications of this new era of politics and the impact Saint Property forecasts on the property market in Scotland.

Election Focus

• Matthew Sinclair is quoted on telegraph.co.uk on the day after the election: “The equity markets are unpredictable, especially with recent events regarding Greece, Spain and Portugal and the state of these markets has a direct effect on the property market.”
• With the E.U. and I.M.F. agreeing to 750 billion Euro rescue package and Spain announcing plans to cut their budget deficit from 11% to 6% by 2011, some short term confidence has been brought to the markets.
• The usual Spring property market had its bounce dampened as Britain, Europe and the International community waited to see who would enter Number 10, how, and with who in tow.
• The announcement of Brown’s resignation, and a coalition between the Conservative Party and the Liberal Democrats on Tuesday night hailed a new era in politics - the first coalition Government since 1974 and the first Liberals in Cabinet since Churchill’s war cabinet. What we can expect is an amalgamation of manifesto policies of the two parties sharing power.

The Policies

• The Liberal Democrats have agreed to drop their manifesto plans for a “Mansion Tax” on properties costing more than £2m.
• The Conservatives have agreed to put back plans to raise the Inheritance Tax thresholds to £1m.
• Britain will not be joining the Euro - in line with Conservative policy.
• An emergency budget will be announced within 50 days.
• As expected, Capital Gains Tax to double to 40%
• The coalition proposes £6 billion spending cuts this year to reduce the record budget deficit; a substantial rise in income tax allowances for lowest paid from April 2011; a study of the split between retail and investment banking and increase in the Bank of England’s oversight of the financial industry.
• Holyrood will get new powers to raise income tax in Scotland - recommended by the Calman Commission (the 2009 review of Scottish Devolution).
• A new commission to consider the West Lothian Question (where MPs in devolved nations are able to legislate on issues such as health and education in England, but have none of those powers in their own nation).
• Creation of a green investment bank and pledge to invest in marine power.

Impact on the financial and housing markets

• Initial response from the financial market to news that Cameron would be taking over from Brown, in a coalition that commands a majority, lead to a rise in the pound and gilts on Tuesday but then dipped and later revived.
• However, we can expect serious measures to be taken with the economy. This could lead to a weakening pound that may prove very tempting to international buyers, with a ripple effect from London reaching Edinburgh and Scottish rural properties.
• The promise of an election in 2015 may assuage the doubters’ fears of an unstable and short-lived coalition, helping to sure-up confidence in the coalition Government, encouraging stability in the markets. 

Saint Property

• Saint Property offers advice to buyers looking to purchase property in Scotland.
• We advise on residential & rural property ensuring a property purchase decision is made with sound advice.
• We offer a pre-property purchase consultancy service for those who have found a property but need a second on opinion. We evaluate all aspects of a property on the purchaser’s behalf and report with an unbiased view of our findings.
• Please forward this to anyone who may be interested in the Scottish property market.
• Contact usfor advice on +44 (0)131 478 4533if you are considering purchasing a Scottish Property.