How is Brexit Impacting Property Investment in the UK?

There isn’t much worse than the unknown, is there?

With the uncertainty of Brexit, the whole nation has gone into panic mode, thinking that life as we know it is going to come to an end. Investors might be holding off on the chance that a no-deal Brexit does happen, but should we really be so concerned? We’ve written this blog to discuss what the future might hold, and it doesn’t appear to be all doom and gloom for property investors. Let us tell you why…

What Do We Know for Certain?

Since Article 50 got the green light, the anxiety of Brexit’s impact on the UK economy has skyrocketed, with the property sector being one of the most affected.

When it comes to why this is, there are almost too many factors to list. Concerns about how leaving the EU will impact the economy has led to hesitations about borrowing and investing.

At least, this is the perception but I’ll bet that if you look out the window of any city centre building, you can see plenty of new developments taking place.

In a place like Manchester, the skyline is practically dominated by cranes. This is because the reality is that little is known for certain when it comes to how Brexit is going to impact property. Plus, the whole affair has been going on for so long that while concerns may exist, the market cannot stop for that long.

While it’s true that in some areas property prices have begun to dip, that is far from true for the entire country. In fact, in many areas, prices are still rising steadily. In London, prices are dropping but this comes after years of rapid growth. So, while the drop may coincide with Brexit, it is far from conclusive that the UK’s European exit is the cause.

Even if Brexit is resulting in lower prices, for those savvy property investors, this whole fiasco could make for the perfect investment opportunity. 

In the last year, just over a billion pounds worth of value has been discarded from the UK’s property market, as many buyers and sellers are in the ‘wait and see’ mindset, before signing on the dotted line.

While this may seem like a lot, last year the total UK housing market worth reached £7.29 trillion, so one billion is really just a drop in the ocean. So, back to the original question, what do we know for certain? Well, the frustrating answer is not a huge amount. Different parts of the country are impacted by Brexit and its ramifications in different ways. What is clear is that Brexit has not brought the property market to a standstill. While smart investments may require a little more research to uncover, they are still there to find.

Investment Options in Brexit Uncertainty

The location you choose to invest in is likely to make a pretty significant difference in the following years of Brexit.

For example, areas like Manchester show that the projected property value is expected to rise over 20% in the next couple of years. Of course, this is a good position to be in, as they can make returns regardless of the outcome due to the continue in capital growth.  Buying off-plan might be not be a the best move, as Brexit’s implications are going to to leave a big trail behind them.

The price of the pound impacting build and budget schedules is only going to decrease the trust in off-plan we have.

What Do Other Investors Think?

A survey conducted by Market Financial Solutions suggested that since the EU referendum in 2016, 64% of investors haven’t let Brexit influence their property investment choices. 

It also suggests that 45% of investors have expanded their property portfolio since the referendum, and only 7% have sold at least one home as a result of Brexit. The survey also suggested that the majority of investors don’t see Brexit having an impact on their long-term strategies.

More than half of those who participated said that they won’t be changing their property investment strategies, even after the Brexit deadline.

Friend or Foe?

So, is Brexit a friend or foe for property investors? We won’t know for sure until after it happens, but here are a few pros and cons:

Pro #1: Buying Cheap

If Brexit does result in a massive drop in house prices, then this presents an opportunity for investors. The UL property market is great a bouncing back when given enough time, so cheap property could allow you to enjoy great capital gains in the future.

Con #1: Selling Cheap

If the market drops then you may be locked into your investments for longer than you’d like, as you won’t be able to sell without making a loss. However, by choosing the right location to invest in in the first place this risk can be limited.

Pro #2: The Rental Market is Strong

As house prices have increased, more and more people have relied on renting. In fact, between 2007 and 2017, the number of UK renters has increased by 63% and demand is still growing. Whatever happens with Brexit, they’ll be plenty renters to make you can still receive a good return on your investment.

Con #2: Extra Work

When it comes to investing, any uncertainty means you need to do extra homework. So, when investing around Brexit, you’ll need to dedicate more time to everything from researching local markets to budgeting for now and in the future.

Pro #3: Adding Value is Easy

If prices drop, then the money you save when buying can be reinvested into enhancing your new property. Finding properties which have opportunities for extra rooms can increase the monthly rental yield and value when selling in the future.

Not as Bad as you Thought?

Regardless of your political views, there are always going to be those who may just see Brexit as an absolute epidemic for the property sector but this is by no means a certainty.

As you have seen in this blog, Brexit comes with a huge amount of opportunity, which many investors are already making the most of.

The future may be much brighter than you’ve been lead to believe, and if you’re interested in developing a project, and would like further advice,  contact Taylor Rhodes Group today.