Brexit and the UK Property Market

Property investors are trying to avoid the looming rise in Stamp Duty, that will come into play next month, whilst also fighting the uncertainty surrounding the referendum and the UK property market. (1)

In fact, nearly half of homeowners in London have said that they plan to wait until after the EU referendum before they either buy or sell property. This data was taken from a recent survey of 1,000 homeowners in the UK. (2) The question is, will leaving the European Union really affect the UK property market and should UK homeowners be concerned?

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The United Kingdom will hold a referendum on its membership in the European Union on June 23rd, 2016. With sovereignty, a leading argument for the UK to make a quick exit from the EU, many experts believe that there are both positives and negatives to both outcomes of the referendum. Many officials believe that the UK should have 100% autonomy to make their own decisions about all issues that affect the UK and so leaving the EU will enable us to once again govern ourselves. (3)

At the moment, the European Union acts as an official body of decision makers that will come to decisions on issues that affect all members, such as immigration, political issues, international trade and tax. Brexit, the decision that the UK will leave the EU, has been supported by many, as the only solution that will allow the UK to take back all control on all decisions set to be made in the future. (4)

Being a member of the EU has it’s advantages, as well as it’s disadvantages but the nervous tension being conjured up, as the summer referendum edges nearer, is taking it’s toll on homeowners and landlords in the UK.

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One of the main concerns regarding Brexit is the effect it may have on UK property prices. Property owners are split, as to whether they should sell their home before the referendum or to hold on to their bricks and mortar security until the property market becomes stable.

The referendum may help or hinder property prices in the UK, but at the moment, it is anyone’s guess as to which it will do. What we can be certain is that demand for property will not be considerably affected by either outcome, so those who decide to hold on to their investments can count on the demand remaining stable.(5)

Property prices in the UK are rising still and demand is disproportionally balanced. Demand for affordable, modern properties is at an all-time high across the UK. A new report, from Standard & Poor’s, has predicted that economic growth in the UK will increase by approximately five percent this year. With high levels of employment, rising disposable incomes and persistently low interest rates, house prices will continue to grow.

With mortgage rates staying competitively low, property buyers will have more money to spend on their next buy-to-let investment or first home. Nationwide Building Society also published a new report highlighting a rise in valuations of 4.7 per cent in February 2016, potentially due to a flood of new buy-to-let investors snapping up a property before rises to Stamp Duty in April 2016. (6)

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The UK celebrates international investment. Building strong ties in business, the UK is actively promoting the North of England as a prime investment hotspot to overseas investors. Dubbed the ‘Northern Powerhouse’, cities such as Manchester, Liverpool, and Leeds are set to see an increase in the level of East Asian investment in the next couple of years. Manchester has even introduced a new direct flight route to Beijing, to aid international relations and promote investment in the city. (7)

If we were to leave the EU, international trade may well be affected, but not necessarily in a negative way. In fact, leaving the EU may mean the UK government looks at making the process of investing from abroad easier in order to attract further economic investment, which will contribute to the country’s economic growth.

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At the moment, investing in the EU is a quite straight forward process for UK nationals, but if the UK was to leave the EU, this process might become a bit more complex.

Restrictions may be put in place to make it more difficult, time-consuming and potentially more expensive for UK residents to invest in European property. "There may be implications for UK buyers looking in mainland Europe should we exit the EU," says David King, Head of Winkworth's International department. "If following an exit, extra rules were introduced for British buyers such as visa or money checks then the process could be more difficult. However, as with the UK, investment by overseas buyers is more often than not welcome and as such I cannot foresee any stipulations being too problematic. Instead, it is likely that those looking to buy will just need to make sure they can confidently negotiate the process, which a good estate agent and lawyer with experience in these markets will be able to assist with.” (8)

The referendum will have some impact on many industries across the UK, but property investors can sleep easy knowing that demand for property both residential and commercial in the UK should stay strong.(9)

If you would like to know more about investing in Greater Manchester, please don’t hesitate to contact our team of experts info@heatongroup.co.uk

Sources:

  1. City AM- EU Referendum
  2.  IB Times - EU Referendum
  3.  Money Week - What Will Brexit Mean For Migration
  4.  Telegraph EU Exit Poll
  5.  Telegraph - Brexit UK Risks Loom
  6.  The Week - House Prices
  7.  The Heaton Group - A Golden Era For Manchester and China
  8. Winkworth - What will happen to the property market if Britain left the EU?
  9. City AM - EU Referendum

 


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