Just over two years after the last UK general election, the country is preparing to go to the polls yet again on June 8th.
The nation isn’t exactly gripped with election fever this time around, but the outcome of the vote could significantly alter Britain’s economic outlook from June 9th.
As well as the immediate changes (like a new Prime Minister taking up residence in Number 10) the election could also cause a major shift in the price of foreign property for UK citizens.
How much property prices are altered depends on how the pound reacts to the election news.
When the 2017 General Election was called in April, pound exchange rates jumped. Sterling climbed from €1.17 to €1.19 against the euro, while the pound jumped $1.25 to $1.29 against the US dollar.
These movements might not seem massive at first glance, but they’d make a huge difference when moving the size figures involved in a typical property purchase.
For example, a £200,000 transfer to the US would have been worth $250,000 before May called the election but $258,000 after, a difference of $8,000.
The pound also hit a seven-month high against the Australian dollar and ten-month highs against both the Canadian and New Zealand dollars.
Theresa May was the main reason behind the pound’s rally – traders quickly assumed that May would be take an easy win in the election and increase the current Conservative majority. For some, May represents political progress as a former Remain supporter who is now committed to achieving the ‘best Brexit’ result.
A Conservative victory is expected to strengthen the Prime Minister’s hand in Brexit negotiations, which could lead to a more favourable outcome in talks with the EU.
Consequently, if May does take gold in June’s election, hopes for a brighter economic outlook for the UK could send the pound surging.
A stronger pound would help you get more for your money when buying foreign currency, thereby making an overseas property purchase more affordable.
However, if 2016 taught us anything it was that there are no guarantees in the world of politics and the chance of a Labour victory can’t be discounted. If Labour claim a majority against the odds, or if a coalition is formed to push the Conservatives out, the pound could weaken spectacularly.
With uncertainty still prevalent about Labour’s stance on Brexit, any government other than a Conservative one may create serious concerns that Brexit will not meet the public’s demands. A new government that seeks to stay in the EU would risk an immediate crash in popularity, as well as prolonged and severe turbulence in the House of Commons.
With the pound strongly devalued by such news, it would become costlier to buy properties overseas. On the flipside, if you were transferring a foreign currency into pounds, your funds would stretch further.
In summary, the best election outcome for a foreign property purchase is a landslide Conservative victory, while a shock win for another party could make it more expensive to buy that home in the sun.