Kate Faulkner is one of the UK's leading property experts and in this article, she discusses the Property Market and Brexit:
There are so many things that influence property prices across the UK, it’s still a little difficult to know exactly how much the current property market stagnation and falls in some areas are down to ‘Brexit’ uncertainty or just normal market movements.
In reality the property market was experiencing many changes, unrelated to Brexit, which are influencing current trends, including:-
• Years of wage growth not keeping up with inflation, making affordability tough, reducing demand for homes
• Changes to mortgage borrowing, including the withdrawal of repayment-only loans, tighter affordability checks and new ‘portfolio lending’ criteria for investors, means many who would have been able to buy a few years ago now can’t.
• Increased taxation for landlords, particularly those in the higher tax bands, reducing BTL demand and even resulting in some landlords selling up, reducing rental stock levels.
• ‘Bad news’ during 2018 including job losses and the decline of the high street which hit consumer confidence
• A huge growth spurt in property prices specifically in London, the East and South, which has now come to a ‘natural’ end.
All of these changes have reduced demand in the buying market and this has contributed to slowing the market.
What’s happened now is that Brexit has added to this uncertainty. More than this, the news headlines suggesting property price crashes and economic turmoil have impacted on demand and supply – so it is not a surprise that buyers and sellers are thinking it’s better to ‘hold off’ until we know what’s going to happen next.
But where does this leave you as a would-be investor or landlord? Investing is always tricky, when times are good, property prices can go up quickly, but this can mean lots of competition for properties and make it difficult to find a deal to stack up. When times are uncertain, like now, there can be some great opportunities to bag a bargain from those that need to sell, however, you then run the risk of buying now and the property market falling.
To help, as a landlord and investor, here are 5 things to consider which may help to mitigate this year’s uncertainty:-
1. Check to see what properties are selling for now versus a year or so ago – can you get a property at a lower price in return for a quick sale? Building capital growth from purchase is essential
2. Take a fresh look at your local rental market. Find out if demand is changing - how easy will it be to let your home if your tenant moves on? Be prepared to upgrade the property to give maximum appeal.
3. Review your buy-to-let mortgages. It may be wise to consider a fixed-rate deal to help control your biggest monthly outgoings for the foreseeable future.
4. If you let property (particularly HMOs) to EU nationals currently working here, it is worth speaking to them to find out what their concerns might be and whether they have any plans to leave.
5. Have a back-up plan to survive if prices and rents fall. Do you need insurance to protect against rent arrears and help if you have to evict your tenant? Will you sell, if so what’s your minimum price?
Often property markets fall quickly for reasons which we weren’t expecting such as an economic shock, and take people by surprise. At least with Brexit, although we don’t know what will happen, you can at least take steps to prepare and protect your investment.
To help you through this current market, do talk to our advisers so they can guide you on how to protect your buy-to-let portfolio. Don't hesitate to get in touch with one of our team today.
For further information call: Arran – 0208 343 1777
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