Is Brexit a Good or Bad Omen for UK Property Investments?17 07 2018
With Donald Trump’s recent visit to the UK and the joy-then-sorrow of the World Cup battle, it would seem there is no space left for Brexit coverage in the media.
But, of course, there’s plenty going on behind the scenes as the implementation of Article 50 grows more imminent by the day.
How is the Brexit issue affecting our property market?
Following the frantic post-Referendum rush to take money out of property funds in anticipation of a huge economic slowdown, things have levelled out onto a far more even keel.
From the day before the referendum result (June 23) and the end of 2016, the average return from the eight largest active UK property funds was –2 per cent. The figures since then average out at 7 per cent.
We have a solid foundation where the fundamentals of the UK property market remain robust and demand for homes is still far outstripping supply.
Average house prices are rising at twice the rate of inflation and current mortgage rates are some of the lowest ever. The buy to let market remains strong, despite the introduction of more stringent tax relief regulations.
There are plenty of major regeneration and infrastructure projects taking place across the country to make Britain an even more attractive place to outsider investment.
We are still home to some of the world’s most coveted universities with a growing student population across the board which is yet more good news for property market growth.
Major Positive Developments
While there is plenty of scaremongering and a certain level of tangible anxiety about the uncertain post-Brexit landscape, the reality is that there are still plenty of major positive developments taking place.
In October 2017, Royal London Asset Management announced the largest ever UK real estate fund at launch, seeded with assets worth over £2.7 billion.
On a smaller scale with individual investors, Brexit has seen less a negative impact on the market and more a refocus onto different types of property investment.
Many people are leaning towards more secure, long-term investment choices such as student accommodation. This offers a solid rental income that rises with inflation.
The Post-Brexit Context
As with most major economic changes, Brexit also provides opportunities for keen investors to harness. Back in the spring, Theresa May offered insight into the structure of the post-Brexit regulatory framework.
Attracting investment to build houses, offices and industrial facilities was high on the list. There are great efforts being made to maintain the UK’s strong economic position, support ongoing growth and cement our nation as an attractive destination for property investment. There has even been talk of reassessing stamp duty levels to create a more vibrant and level market.
If we take a positive, creative look at Brexit and consider it a way of opening doors rather than building walls, then we’re in for a stronger market and even better opportunities where Britain remains an extremely attractive place to do business.
For more details on property investment options, contact Alesco today.