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Insight & Opinion

Will Trump mean higher returns for UK property investors?

Author: Staff





Political uncertainty has been something of a theme in 2016. From the Brexit decision that rocked the UK, and far further afield, in June, to the recent shock in the US presidential elections that saw political newcomer Donald Trump defeat former senator Hillary Clinton, the surprise outcomes of political votes this year has led to repeated concerns over the financial and economic future of many industries across the world.

One of the markets that has been closely watched throughout the political uncertainty that has been prevalent throughout the year is property.

When the Brexit vote was announced, there were fears that it would mean a collapse in the market, but throughout the months since, it has actually shown its resilience. Asking prices and activity, both in rentals and residential purchasing, dropped in the immediate aftermath, but have recovered well in the latter part of the year.
Read what the Autumn Statement will mean for UK investors…

What is next for BTL and Build to Rent?

Now that Mr Trump is set to come into power in a little under two months, there are again concerns about what that could mean for the global economy, and by extension, the property market.

While experts predict that it could mean a tightening of the purse strings market-wide, there could be a silver lining for those operating in the buy-to-let and Build to Rent sectors.

For example, the former chairman of the Royal Institution of Chartered Surveyors believes that in the coming year, political uncertainty across the Atlantic will mean that lenders in the UK become more stringent with their lending.

This is likely to mean fewer people getting mortgages, and as a result, activity in the housing market dropping off.

What does this mean for the rental market?

Well it could be good news. At the moment, only around 65 per cent of people in the UK own their own properties, and a drop in lending could see this total falling even further, which would only serve to push demand in a marketplace that already houses more than five million tenants. For investors in the rental market, this will mean the potential for a real rise in return as rental prices would be likely to peak under such increased pressure.

And with house building activity in the rental sector having climbed by 200 per cent in the past year, it’s clear that the market is well prepared to cope with a surge in demand.

Overseas investors

It’s not just the rental market that is set to see a potential boost from the election, however. eMoov believes that the decision to vote Trump into power in the US could see a rise in the number of foreign investors who are looking to move into the UK market.

Worried about the future of property in their own country, it’s expected that a larger number of buyers in the US may turn their attention to safe havens across the world, and there’s no place quite like the UK when it comes to showing stability in the property market at times of uncertainty.

This leads experts to predict that there could well be a rise in investor numbers putting their money into the UK from 2017 onwards, giving the country a rather ironic boost at a time when the economic uncertainty is greater than ever before.

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