The result of the referendum has far-reaching consequences for many parts of life. The impact that it has on the property market will be a really interesting one. Demand for property is often at the whim of ‘sentiment’ rather than solid financial factors. This is why we see booms and slumps. And Brexit really plays on the aspirations and fear of people.
So, what is happening now? And what does the future hold for property investment in the UK?
Well, it really depends on who you ask… Here is the honest comparison of how Remainers vs Brexiteers think about property investment after Brexit.
Do you want to learn how to invest in property after Brexit?
Remainers believe that Brexit will be a threat to the property and construction industry and UK businesses and, as you probably already know, a huge amount of development in the UK is funded by overseas capital. Everyone’s eyes are on the UK now and this period of Brexit uncertainty may make us unstable to the markets, which in turn results in decreasing number of corporations in theory wanting to set up in our country.
According to the Remainers’, the UK property sector – including architecture and construction – will receive less inward investment, in addition to Brexit possibly resulting in European Union-based funding being withdrawn, in addition to labour shortages in the construction sector, much of which came from the EU expansion countries (post-2004). Given this, the construction industry is not happy with the Brexit vote, as EU Freedom of Movement gave us affordable labour, which now will be of limited supply.
This lack of available labour will, in turn, impact the cost of house building and, together with the lack of certainty on the final deal, will likely result in more cautious spending from clients.
This lack of money movement may well cause both property prices, rent, and general costs to rise to ensure that landlords and businesses are able to stay afloat.
Frankly, what worries this group the most is that politicians claimed that house prices would fall significantly with Britain voting to leave EU, which in my opinion was pretty short-sighted.
On the other hand, the only thing that we can be really certain of is that there will always be opportunities out there for people that are willing and able to do business. Only those that sit on their hands at a time like this in a state of panic will see opportunities pass them by. Those that step forward and look for the openings in the market and the opportunities it brings will prosper.
How can this be done?
Well, Brexiteers believe that the first step is to keep your eyes open for property investment after Brexit. Property is always at the mercy of the markets, and nobody knows what is around the next corner. The investor or developer that is afraid of what might happen next will end up in a state of paralysis, but there are ample opportunities out there and more on the horizon.
Many people think that our relationship with the EU will change individual circumstances as well as the national picture. There will be people out there that are placed in a position where they have to sell their properties, but from another perspective, life circumstances place people in this situation frequently:
The result of the Brexit vote in the referendum might leave more people in a situation where they must sell, and Brexiteers believe that this can be used to your advantage.
In other words, this means that the savvy investor can negotiate a good price with sellers that have a property they need to get off their hands. A large part of the negotiation process is having all the information you need at your fingertips. Finding out the condition of a property gives you some leeway in the negotiations.
While London has seen fantastic growth over the last few years, the regions have taken some time to catch up. Rents have been increasing and the different parts of the UK don’t show the same signs of potential slowdown as London. The bigger regional hubs of the North will benefit from government plans to build a Northern Powerhouse economy, meaning investment in infrastructure and transport links to make the North more competitive.
The South East is seeing a steady rise in property demand and prices, as people look to get out of the overheated London market. Business and commuters look for a lower cost of living outside of London and then take the hit on transport costs back to the capital. The fact is that the UK outside of London is seeing growth means that this is likely to continue, despite the stagnant Brexit negotiations.
London, in particular, is a haven for property investment from around the world. The fact that it is a vibrant city with strong employment and a history of multiculturalism makes it a safe bet for investors from across the globe. Can this really be true?
The weakness of the pound on the international stage has meant that property is relatively cheaper to buy in the UK, especially for those holding Euros or US Dollars. This has seen an influx of money, but not in huge numbers – the fact is that this could be the best time to buy London property from other parts of Europe and the wider world. However, the possibility of the UK having a rocky time ahead as they negotiate their way out of the EU means that some investors are sitting on their hands.
But those niche markets seen as more likely to hold their value have seen interest increase. Student housing and healthcare property have been seen as something that will still attract tenants and buyers in the future, so they have seen a higher level of interest from overseas investors. While many see that there are, and will continue to be, investment opportunities in London, the worries over Brexit will cast a shadow for some time yet. The issue of the single market is a major factor and is cited as a main reason to hold off investment with a ‘wait and see’ attitude. Commercial property is somewhat exempt from this attitude and will continue to be a solid investment as long as business wants to have a base in the capital.
If this is the case then your first step should be to speak to an architecture practice that helps international buyers in London. They can identify the condition of the property you are looking to buy and give you plans of how to make the most of your investment. Remember, the clever investor uses changes in currency to find bargains that might not exist in the eyes of a native buyer. Get all the right advice to make your investment work hard for you.
Let’s get to the point: Both Remainers and Brexiteers agree that although prices may fall a little in the short term they are on a huge upwards trend in the long run. Large cities such as London always see long-term prices rise as people move there for work, lifestyle and city living. This means that short-term drops can be a great chance for an investor that can rise above the panic in the market to buy well. Sounds impressive, right?
Getting a property at a great price in a great city can be tough at times, but falling prices can really open up the market for those that keep a cool head. Whatever opportunities arise, you need to assess your ROI by carrying out professional Feasibility and Due Diligence reports for your investment. Having all the right information at your disposal before you make your decision makes all the difference when finding wonderful opportunities for property investment after Brexit when all around you are losing their heads.
Brexit is expected to dominate our life for the next two years at least. The result of Brexit will not be limited to economic effects as I believe political, social and cultural implications will also rear their head.
Basically, all the laws and legislation will have to be re-written, and post-referendum results are only the beginning of long journey to form the future of this country. There is a lot of speculation about what terms we are leaving the EU on, and this will have a direct result on the construction market.
Supporters of Brexit point out we may have more ‘freedom and choice’ after the vote to leave. They argue that there is a lot of ‘red-tape’ in the industry because of the laws imposed by European Union – but fail to note these laws are directly embedded in British law. To change any of the regulations we would have to come up with new British laws and, based on the relationship we want to uphold with the EU, we will still be subjected to many EU laws, but with less say in them.
The Norway Model
The Norway model, otherwise known as European Economic Area (EEA), will allow us free movement of goods, services, capital and people. However, we would still be required to contribute to the EU budget and abide by their legislations – negating any of the reasons we voted to leave the EU in the first place, but now with no say in any of the matters.
Other options are free trade agreements, resulting in reduced trade barriers, no contribution to budget and no vote, and the World Trade Organisation model, giving a clean break but resulting in not being part of European Union single market and also being subject to EU common tariffs in regards to trade.
All we have left now is to wait, how it all unravels, but one thing is certain in 2019, there is a lot of change on its way and a lot of challenges to face – but also opportunities to be had in property investment after Brexit while others panic.