As the Remain/Leave campaigns played out on the UK stage, the Chancellor of the Exchequer predicted that property prices would drop 18% should the UK vote to leave the EU, so when the announcement came on Friday morning, it sent shock waves through the property industry as well as a little angst at the Mac main Office.
However, now the dust has started to settle we are able to take a clearer view on the state of play, Mac The Property Co determines whether or not a Brexit is going to raise the roof of the UK property market, or if we are all still as safe as houses?
So what happens now?
In all honesty, nobody really knows. Nothing like this has ever happened before, and everyone – from the politicians to the banks (and me as a landlord included)- are feeling their way in the dark.
I’m a landlord. How does it impact me?
It is likely that the private rental sector could be one of the only markets in the UK to benefit from a Brexit in the short term.
With fewer people looking to take the plunge and put their property on the market until there is a clearer view of the future of the UK, there is less property stock for buyers to choose from. With this in mind, many people are turning to the private rental sector to fulfil their housing needs instead. With an ongoing demand for quality, private rental properties, it is expected that rental rates will rise in the same way that property prices have been, particularly in the capital – great news for landlords, not so much for tenants.
With rental demands likely to rise, landlords looking to rent their property are in a great position, however, there is one fly in the ointment. Forecasters are predicting a national rise in unemployment, with estimates suggesting that an exit vote could see wages cut by an average of £800 a year, and cause 820,000 job losses. With rental rates creeping up, it is wise to be aware that such changes could impact on a tenant’s ability to pay the rent, and could leave many landlords with empty properties as we move through the coming months.
I’m a tenant, will I be affected?
Good news, and bad news.
Following the stamp duty hike in April, many foreign investors were turned off of investing in UK property, leading to a slump in new rental properties becoming available. However, the drop in the value of Sterling has offset the stamp duty and tax adjustments, and once again the investment market has piqued the interest of foreign investors from the Middle East and Asia, many of whom look to buy bulk purchases of buy-to-let properties. This injection of investment will hopefully help keep rental rates manageable in the major UK cities, where the cost of private lettings peaks.
The bad news, however, is that there are only so many investors, and with more and more people having to turn to the private lettings industry as the UK housing market weathers the storm, it may be harder than ever to find your perfect pad.