Brexit’s Impact on the Property Market
In what feels like the slow two by two boarding on to Noah’s Ark, the British public makes a march towards an unknown destination, which will hopefully lead to a prosperous exit from the EU, but could easily explode in our face, should negotiations continue to stall before our expected departure on October 31st 2019.
Who knows what deal we will get? As we frantically look to stock our shelves (you can never have too much soup), point the finger at Boris Johnson should he leave the EU without a good deal or flee the country as a last resort, the jury is still out on a number of concerning issues.
One important worry for business owners is how Brexit might influence the property market. We are already seeing signs of it now. Will investors continue to throw their money into housing? How will people rent? Will citizens of EU countries be evicted/still welcomed to sign up with a landlord?
The latest research suggests that the amount of people buying houses continues to decline, with many holding off on purchasing or selling homes due to the uncertainty regarding the implications of Brexit.
Halifax, the UK’s biggest lender mortgage lenders claimed house prices fell by 0.4% in June and by 0.2% in July, with it surely only increasing more from here. As a current landlord, if you’re making a positive spin on Brexit, this could mean good news for your buy-to-let homes.
Because of a lack of job security, the weakness of the pound and people struggling to afford their own property (20% of the market is made up of private renters), there will be an increased demand over the next ten years, especially with it being a useful short-term solution amidst the backdrop of our departure.
The bad news is the demand will be so high for properties that prices will go up on housing, meaning there will be fewer properties available, plus the introduction of further taxes, an increase on stamp duty and the passing of the Tenant Act Fee means it could be a difficult investment to manage.
Currently, the latest figures show that the price of renting has dropped for the first time in a decade (brief cheer for tenants!), with even London down by £30 since 2018. This is largely down to the Tenant Fee Act, but how long will this continue?
Another question that remains unanswered is how the situation will be for EU nationals, who currently reside in the UK. Rough estimates suggest that they represent around 10% of the private housing sector and with many seeing the UK as a viable destination to study at university, how will Brexit affect those already renting or hoping to?
Will landlords have to put up the cost of rent to secure the future of their portfolio? With most investors, they want long-term security for their assets and to have a better understanding of how their business will provide a stable income, not just rolling a month to month basis but five or ten years from now.
It is a challenge for any property owner to predict what will happen with Brexit – very few know, including those working in the government – so while there remains a cloud of confusion over this once powerful kingdom, as a landlord or tenant expect showers for the foreseeable future.