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How will a No-Deal Brexit effect UK Property Investment? Are There Any Positives

By Surrenden Invest | December 2, 2019

How Will a No Deal Brexit Effect UK Property Investment? Are There Any Positives.

Let’s assume that the UK and EU cannot agree on the future relationship and the divorce is messy.

Regardless of your position on the debate, it seems inevitable that such a scenario would cause a degree of volatility to both the economy and the property market.
Whilst some in the Brexit camp will be quick to refer to previous negative house price predictions never coming to fruition, this time we would have categorically left the EU.
In other words, we would be entering unchartered territory and housing would be one of the first industries to feel the effects.
There’s little question that an uncompromising no-deal political rhetoric would result in Sterling’s devaluation, the result could be a potential rise in inflation.

“A no-deal Brexit is definitely going to be a challenge for the economy which is why the government is putting together so much preparation, should it come to that. And we’re very clearly focused as a government that we want to get a deal.” 

Amber Rudd, Secretary of State, Department of Work and Pensions.

But are there any positives for the UK housing market from a no-deal Brexit?

Despite concerns over Brexit and reports of falling house prices in July, average property prices are forecast to increase by 1.5% over the next three months. August is set to see prices rise by 3.2% and although this is expected to drop to 1.4% in September, annual growth will be up 3.1% according to the forecast – the most significant annual increase in house prices since last November.
While many areas are expected to see property prices climb in the three months to October, with rises of anywhere between 0.8% in Scotland and 7% in the south-east of England, other parts of the UK may see modest slumps – although taking into account the level of uncertainty surrounding Brexit, the outlook is still positive.
Scrapping stamp duty for downsizers could be a cost-effective way to stimulate activity throughout the market, freeing up family homes and enabling chains of transactions at relatively little cost.
Furthermore, many home buyers may be keen to complete before the 31 October deadline and this surge in transactions could also stir up the housing market.
Potential positives of a no-deal Brexit
  • All of the uncertainty could mean that we’re in for a buyers’ market.
  • Should prices drop, first-time buyers may have the opportunity they have been looking for, particularly if interest rates stay low and the Help to Buy scheme continues. However, one of the consequences of no-deal could be that the mortgage lenders are forced to tighten their purse strings.
  • A weaker Sterling value could turn the UK into an off-shore investor’s delight – particularly as the country will continue to be recognised as safe, transparent destination.
  • Combined with recent announcements to further cut corporation tax, widen the threshold on higher rate income tax and reform stamp duty rates to pre-2007 levels, investment activity in certain sectors may be able to stimulate the property market as a whole.
Although it certainly wouldn’t be plain sailing and many in the Leave camp may feel dissatisfied, this is probably the best outcome.
Furthermore, many home buyers may be keen to complete before the 31 October deadline and this surge in transactions could also stir up the housing market.

Ultimately, a good deal is all in the details – but clarity in any shape may at least give the economy some breathing space and a sense of comfort about where things are heading. As a result there will arguably be a renewed sense of confidence across the Country in the housing market.

Jonathan Stephens, MD, Surrenden Invest

For regular updates on Brexit and investing in UK buy to let hotspots, follow Surrenden Invest on social media.

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