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Insight & Opinion

As the date for Brexit is announced, are there still good times ahead for UK property?

Author: Staff





When the UK decided to vote for Brexit in June, there were many predictions that it would be a bad situation for the UK property market, among other sectors. However, in the months that have followed, this has not actually proved to be the case, with activity, prices and rental demand all having risen in the months since the historic referendum.

For this reason, the announcement this past week from prime minister Theresa May that the UK will trigger Article 50 to start the official Brexit process in March 2017, triggering two years of exit negotiations, has not been met with the same sort of trepidation in property as the original vote was.

As fears have been raised over the future of the pound and the employment rates across the UK, the property market’s resilience in the last few months means that there’s no real reason to predict a disaster in coming months.

In fact, the way the market looks at the moment, it could actually still be one of the best times to invest in rental property, with Brexit even potentially presenting some opportunities that would not otherwise be there, and marking a positive future for the sector.

Brexit and UK Property

Rental stock shortfall

Perhaps the best reason for positivity about property is the fact that it’s still a good time to invest in rental homes at the moment, thanks to the simple fact that the private rented sector is experiencing a real shortage in stock.

The Brexit vote led to a climb of 2.1 per cent year-on-year in rental demand nationwide, which has seen added pressure on the sector and the number of homes it can provide.

Moving forward, this is not likely to change either. The Royal Institute of Chartered Surveyors (RICS) reports that the UK needs to add a mammoth 1.8 million homes to the market between now and 2025 to meet demand. This shows the real need for investment in the private rental sector.

With new homes needed over the next decade, it presents a real opportunity for investment in new-build properties specifically designed for the rental market, which look to fill gaps in the market and maximise income for investors through providing homes where they are needed most.

Our 2016 UK Housebuilding Infographic will explain more about the current housing crisis.

UK property investment

Overseas investors

Some of the biggest opportunities that will exist moving forward after Article 50 is triggered is for those coming from overseas. Investors from other countries have long been interested in UK properties and the fantastic potential it offers for strong returns and capital gains.

This demand for property could increase in the aftermath of Article 50 if the pound reacts in the way it is expected to – and early activity in the markets this week suggest it will.

Should the pound fall as it is predicted to after the UK triggers the exit clause, then the low value of sterling will mean investors facing a far better opportunity in the UK, with the exchange rate likely to allow them to get more for their money.

Since the referendum vote was announced in June, there has already been a rise in investment from overseas, with Chinese investors in particular having made their way towards the UK at a faster pace than ever before to take advantage of the lower value of the pound. And with sterling likely to see further drops in the aftermath of Article 50, this will only see a rise, with experts in the Far East suggesting that China has only just begun in terms of sending money into British property.

So with both a gap in the market, and a potential for huge surges in investors likely, it seems that even as the doom and gloom hangs over other areas of the UK, the property market will be likely to continue with the strength it has previously shown off for months and years to come.

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