01 Jul Tenant Demand Post Brexit Vote
Did you know that there was an EU Referendum last week? Well, here we are a week later and life goes on. Suggestions of an initial housing crash seem to be unfounded. We are still letting property, we are still selling property and the phones are still ringing.
But what effect will Brexit have on demand for rented property in our local area?
The housing market is surprisingly resilient (at least over the long term) and, crucially for the private landlord, if the sales market does take a dip (as some predict it will) the lettings market is likely to see an increase in tenant demand and lower house prices might make up for the extra stamp duty landlords have to pay now.
Of course, there’s always the chance that house prices could increase. Uncertainty in the markets could well lead to more fall throughs, less supply of stock and therefore an increase in prices. It’s early days, I know, but we’ve not had any indication of this happening here.
Whereas the uncertainty in the market could see an initial drop in demand as people consider their future plans carefully, on the other hand, there could be an initial increase in migration to the UK as EU citizens seize the opportunity to live and work here before we leave the EU. This could well provide even more tenant demand in the short term especially in those areas where job prospects for them are good. And, as we know, more tenant demand means higher rents.
And for anyone who might have been concerned that EU citizens will need to leave the country imminently, David Cameron has already confirmed that this will not be the case. So, those of you with European tenants need not worry. There is, however, some speculation about some of the larger companies moving their operations out of the UK which could have some effect on tenant demand and also current tenancies in the local area.
So what does this mean for the long term? That depends on what deal is struck with the EU. If there is still free movement of people across the EU then presumably nothing will change as regards tenant demand. If a points based system is introduced for EU citizens then we might see less EU citizen tenants in some areas but this will depend on what the points system turns out to be. If the UK needs to fill positions in the NHS, for example, and your rental property is within 10 miles of the Queen Alexandra or Southampton General Hospital – I suspect nothing will change. And, if the existing points system is extended in any way for the rest of the world then could this pave the way for even more people looking for property in the UK? One of the arguments for leaving the EU was, after all, to make it easier to trade with the world rather than just the EU.
The only certainty at the moment is uncertainty but if you are at all uncertain about continuing your status as a private landlord remember this: People are always going to need a home and until we start to build more houses demand for renting is likely to stay high.
I’d be very interested to hear your thoughts about what you think the private rental market will look like post Brexit and whether you have changed any plans because of it. Please get in touch – 01489 579911 or firstname.lastname@example.org.