What happens to property after we pull the Brexit trigger?
Today, Wednesday 29th March 2017, is a landmark day as we prepare for the trigger of Article 50. The UK officially begins a two-year negotiation to leave the EU as a result of the referendum back in June 2016.
So, what will change and where does this leave the UK property market?
What happens next?
While the UK’s decision to leave the EU was announced over nine months ago, negotiations are likely to be lengthy. Once Article 50 has been triggered, the submission cannot be withdrawn however, while it is unlikely, there is nothing to prevent a potential U-turn on the government’s decision following on from the referendum.
Should all go as expected, the UK will remain a member of the EU for two years until the official ‘leave’ or ‘exit’ in March 2019 allowing time for any outstanding negotiations and trade deals to be carried out.
Will This Affect Buy To Let?
Brexit or no Brexit, the buy to let market is healthy. This doesn’t just apply to the buy to let market either, there is a huge shortage of stock across the UK and this is likely to result in very little change to the UK market and house prices in general.
Savvy investors will have already pulled away from the London market in favour of lower prices, high yields and capital growth opportunities to be found in other parts of the country, particularly the north. If there’s anywhere where uncertainty is likely to hit, it’s in the south where prices have been slowing for some time.
Regardless of the trigger, people still need homes to live; and with the high levels of deposits required and the stiff competition in the residential market, investors, landlords and the private rented sector continue to be heavily relied upon to bridge that gap.
How About Property In General?
The appetite to own a property is still very much prevalent. The confidence in the wider UK market is continuing to grow at a rapid rate and this is unlikely to change due to Article 50. As mentioned previously, if there’s uncertainty to be felt, this will surround the London markets due to spiralling house prices and individuals pushing affordability in the hope of capital growth. Now the market has cooled, this is most likely where an impact will be felt.
Interest rates are also unlikely to change as the Bank of England carefully monitor activity.
A word from our managing director, Graham Davidson, at Sequre Property Investment comments on the Brexit trigger and the future of buy to let:
“Article 50, whilst a key date in the calendar of the UK economy, is very unlikely to have any effect on the current housing market. Investors and property buyers will have done thorough research, long before today, and whilst many individuals predicted the tumbling of prices following on from the initial Brexit result, these have largely proven to be inaccurate.”
“Whilst it is difficult to fully predict the future of the housing market, we would be very surprised to see property suffer dramatically at the hands of this particular action. While the capital and other areas of the south do currently seem to be taking a knock in terms of house prices, the north is prospering, with areas like Manchester seeing house prices rise as much as 8.8% annually.”
“Overall, the outlook may be a little uncertain for certain parts of the country, but as the last nine months following on from the referendum haven’t altered the market in any way, and another guaranteed two years remaining within the EU, property still remains the best performing asset class in the UK right now.”