To Brexit, Or Not To Brexit, That Is The Question...
With the U.K. Referendum just around the corner, the biggest question for property investors and landlords alike is 'What will happen to the property market in the event of a Brexit?'
With so much opinion, spin and scare mongering in the news, it is hard to know the fact from the fiction. Regardless of your particular take on things and which direction you intend to vote, no doubt there will be consequences either way which will ultimately affect the UK property market.
I am not here to offer my opinion on which way to vote, nor do I have a crystal ball (unfortunately!) to predict the future, however I would like to make a comment about how to deal with the aftermath should we see a drastic change in circumstances. Even if the status quo does remain the same, there will still be big considerations to make for future purchases or indeed for restructuring your existing portfolio.
There are so many additional aspects in terms of being a landlord which we now have to take into account, that the outcome of the Referendum is just another facet. The recent changes to Stamp Duty, imminent approach of the new tax laws coming into affect from next April, combined with a raft of landlord legislation changes such as immigration checks, deposit protection and the Energy Act 2018, I think we have enough on our plates to think about!
After the Referendum happens, business will still go on, people will still need to be housed, there will continue to be a massive shortage of housing stock (no matter the outcome) and, as far as I'm aware, there is no more land being built! By all accounts, and compared to many other businesses in the UK which could be affected by a Brexit, I believe that property will continue to stand the test of time.
Regardless of what happens, external circumstances beyond our control will always continue to affect any business as well as the property market. The best you can do is to continue to build a sustainable business which can stand the test of time. Investment or development property should always be bought with a business head on in any event. The fact remains that with such an unprecedented event in our country's history that no-one really knows what will happen until it happens...
In terms of popular opinion, it has been noted that a Brexit could potentially have a huge impact on inward investment into the UK, bringing about uncertainty and hesitation in the market. If this were the case, the lack of foreign investment could have a massive impact on the build rate, therefore exacerbating the housing crisis! A knock on effect would therefore be a continued propping up of property prices due to the lack of supply to meet demand. As a basic law of business, isn't this always what drives pricing?
In economic terms, of course, should Brexit actually take place, the climate would change dramatically. Larger institutions are massively concerned for the economic future of our country in this instance and indeed, this uncertainty would change the face of Britain.
At the end of the day, who should we really believe and listen to? There are technically very few facts being presented to us. The numbers which are being thrown out, both in terms of immigration projections, economic impact and various other statistics are mainly conjecture. The bigger businesses and institutions all have a vested interest in keeping the position as it stands for their own best interests. Therefore with so many variables and unknowns at this stage, the best we can do is follow our own gut instincts, try and wade through that which we are being told and come to our own best conclusion.
In any event, and even if the situation were to remain the same, I, for one, remain calm and positive about the future for the landlord community. We provide a valuable and necessary service to our neighbourhoods and will continue to do so for many years to come. If we all remain as conscientious and business-minded about our portfolios and remain as flexible in our approach as we're going to need to be, then we should all fair well.
See you again on the other side in the next chapter of this wonderful country's history!
Hazel de Kloe
Property Investor | Property Mentor | Speaker | Author
The contents of this article are for educational purposes only and we make no recommendation of any particular property purchase. The price of property can decrease as well as increase and you make any purchases of property at your own risk.
© Why Property Works 2016 | www.whypropertyworks.co.uk