Brexit has happened. We are now officially out the other side and no longer part of, or tied to, the European Union. There has been much speculation on how this will impact the housing market with experts proclaiming both doom and gloom and a buoyant market.
Although forecasts predicted a crash in the property market following the EU referendum, their forebodings were not borne out. The UK property market showed surprising resilience, growing steadily since 2016, and has even shown its highest growth rate in six years through the pandemic. This will necessarily have been influenced by the Stamp Duty holiday, but by how much and the potential fallout when it ends remains to be seen.
Deal or no deal uncertainty
After the referendum result the stock market crashed, and it was widely predicted that the housing market would also dip dramatically. Even the Bank of England agreed. However, the gloom mongers were disproved when the property market proved it was more resilient that anyone may have expected.
One of the leading causes of property market uncertainty in 2020 was the question of whether the UK would, or wouldn’t, get a deal. Most experts forecast a gloomy outlook if we had crashed out without a deal, but the government’s last minute agreement with the EU brought at least some relief.
Brexit impact on the lettings sector
There has been widespread discussion on how Brexit is likely to impact the lettings sector. While property from an investment perspective is one consideration, landlords tend to get fidgety when good quality tenants are difficult to find.
The number of Europeans working in the UK that need to rent has been widely forecast to dip dramatically. Letting agents and property managers will also be on their guard against tenants potentially defaulting as pressures from Brexit and Covid mount. It is also possible that shorter term lets may become the norm for 2021 as prospective tenants are unable or unwilling to commit longer term.
The potential for change, increased Right to Rent checks and faster turnarounds for tenants bring increased pressure for Letting Agents, Property Managers and those dealing property inventory checks. Any business not already using an inspection and property inventory software solution, such as Inventorybase, is likely to find the administrative burden increasingly onerous.
Short term change for short term resilience
Landlords may need to get creative or become more flexible to ensure that they weather whatever the combined impact of Brexit and Covid bring in 2021. Used to taking advantage of property market fluctuations and holding tight when needed, diversification may be a new option considered for this year.
Brexit may dictate that uptake in the rental accommodation sector may dip in the short term. However, uptake in the student letting sector may well increase. Many candidates decided to take a gap year in 2020 due to the impact of Covid, so demand for places in 2021 is likely to be high. Equally, there were more international students starting university last year than previously and they will need accommodation for their second year too.
For landlords in the right geographical areas a pivot to providing student accommodation, even just in the short term, could make it easier to ride out bumps in the property market caused by Brexit.
Long term growth
Whether the gloom and doom experts or the buoyancy pundits are correct, there will always be a demand for rental property. Most of the UK’s letting markets boomed in 2020 and those areas that suffered are likely to rebound during the course of this year. There might be a few bumps in the road for those involved with the lettings market but in the longer-term property and lettings are likely to remain a relatively risk-neutral proposition.