Snap Election – YIKES!

So – many of us thought that we were nailed on for a late 2024 election. Sunak hanging on by the fingernails. Polling is terrible (things can change, of course). There are a few theories why:

He fancies a long summer holiday (only half joking, but who could blame him if this were true). Things are the best they have been for a while (best economic growth in the G7 in Q1 ‘24, inflation down to 2.3%). Things are going to get worse in H2 so he needs to get on with it now (there wasn’t any indication of that immediately obvious to me). Surprise is the only meaningful weapon left (or it was).

I’m not going to spend a long time speculating on which of those, or mixture of those, is remotely accurate. Let’s instead look at what this likely means.

We’ve got 2 bills of real interest in the parliamentary machine at the moment. Firstly – Renters’ reform. Highly controversial – my opinion for what it is worth is that it is far better off happening under a Blue government than a Red one. I’ve had a decent chunk of property in Scotland for years, and very little changed when they phased out their s.33 – the equivalent of our section 21 – and in many ways, the system is pretty fair. For example – you don’t get “the dance” where someone pays £1 under 2 months rent to ensure they are not 2 months in arrears, on the morning of court. That doesn’t work. 3 consecutive months in arrears and you are gone. (Just one example). Abolition doesn’t scare me, but I know it does – but I would bet diamonds that what REALLY scares you is not knowing how you will still recover possession – if you want to sell, move back in, etc. – and nothing is certain until royal assent.

The second reading in the Lords, 4 hours 21 minutes of it, was just 7 days ago. Next step is committee – no date yet set. There is traditionally, upon the calling of an election, a “wash-up” period. The bill can still pass, as long as Labour co-operate, but it is tight. Hard to call what will happen. There will need to be prioritisation! Committee is normally up to 8 days. Then Report stage – several days, usually shorter than Committee. Then a third reading. THEN back to the Commons for the Lords’ amendments to be considered and THEN royal assent (when both houses have agreed). Not impossible – but you can see what shortcuts need to be in the process here. Normally wash-up is less than a week!

Leasehold and Freehold Reform is already at Report stage – so a couple of weeks further on, technically, but will it now be prioritised? Technically, the house would have risen tomorrow and not come back until 3rd June, for the Whitsun recess – but all bets are off at this stage. It would be incredible for both to be passed and it would be an achievement to get one through, at this stage…….there’s one bill currently at consideration of amendments and 6 on their third reading in the Lords – including AI regulation, employment rights, Genocide prevention and response, schools (mental health professionals), and victims and prisoners – so those are way ahead, and how long will wash-up be? Both of our bills look unlikely to pass at this stage unless there could be a really strong argument that they are vote winners, because that’s all that the incumbents are going to look at at this stage.

Then consider the likely market implications of this announcement. People (and particularly people who operate in open markets) don’t like uncertainty. Investors don’t like uncertainty. Tonight – there is just that. Sales agreed traditionally fall quite sharply – although there is momentum in this market, and post-Covid lots of “traditional” measures have changed – this could be one. I personally think there will still be an impact, particularly on the investment market – but less of an impact than some of our more historically significant elections.

What does that mean? A chance to bag a deal at, before, or after an auction? Possibly. There will be some vendors who just want to get a sale agreed before an election for a million reasons. Lots will be concerned about tax changes – and so make the most of a sale before a change of administration that is likely to be even more tax-hungry than the last and the current one. Personally I won’t be letting any of this put me off – if anything, we will be working harder than ever as the next 6 weeks are likely to contain some juicy opportunities!

How about a quick peek at the probabilities? Betting markets can do a good job, although they failed abjectly twice in 2016, both very memorably, when “Remain” and “Hillary Clinton” were both defeated at very short prices (implied probabilities, respectively, 92% and 80%). But the markets are liquid and contain good info about likely outcomes. Brace yourselves.

Most seats – implied probabilities: Labour 93%, Cons 7% (forget the rest).

Overall majority: Labour 86% No overall majority (Hung Parliament) 12% Conservatives 2%

Conservatives to lose over 200 seats from their current position: 63% (ouch!)

So – stranger things have happened but it looks like Hara-Kiri from Rishi. He didn’t help himself, in the rain, with “things can only get better” playing in the background. That soon-to-be-meme might well come back to haunt him.

Share This Article