Brexit Property Market

Unless you’ve been living under a rock, you might have noticed the recent headlines have been full of warnings about the economy post-Brexit. Private landlords are facing potential changes to regulations regarding EU citizens and confidence in the UK economy has fallen to historically low levels.

A change to the economy equates to a change in the property market which will affect a large number of private tenants and landlords. With an official Brexit date set for March, the value of the pound has slumped and the property market has slowed down leaving landlords worried about rising inflation and the post-Brexit property market.

Currently, tax changes are more of a concern for property owners than Brexit, as buy-to-let earnings for landlords have dropped to a three-year low. Landlords with large property portfolios have been worst affected, as three-quarters of landlords managing between eleven and nineteen properties having reported a drop in their profitability over the past three years. But there is a fear that if the pound falls further, it would leave us with bad interest rates which would impact on mortgages. So as Brexit approaches, a lot of people are waiting to see how it affects the housing market.

Brexit uncertainty is proving to be hugely detrimental in some sectors, including parts of the property market but it appears that private landlords will probably not be impacted as largely as some expect as many people will choose to rent a property rather than enter the mortgage market. Property experts believe that in turbulent financial times people are put off making major purchases like buying a property. People are aware that making one of the biggest purchases of your life at the wrong time can be a huge risk. Unsure of how not just the UK economy and mortgage rates will be affected but also their own jobs. This means that the demand for rental properties isn’t going to decrease any time soon and neither will the trend for increasing rental value as home ownership affordability becomes even more of a challenge for first-time buyers.

In the past, periods of uncertainty have benefited the rental industry as renting a property helps to reduce risks, and it appears that the current Brexit uncertainty is likely to continue. There is a risk for landlords however as a potential rise in unemployment levels may see some tenants struggling to keep up with paying rent. This has seen an increase in demand from landlord’s for products such as loss of rent insurance in order to safeguard rental payments.

Although private landlords have seen increased taxes and more regulation a recent survey of 2,900 private landlords showed that nine out of ten landlords surveyed, intended to either keep or expand their property portfolio in the next year, despite one-third also expressing their concerns over the potential implications of Brexit.

Building a property portfolio can seem daunting, but it can be a highly valuable financial decision. If you want to build a property portfolio, don’t run before you can walk. You need to be cautious and consider the property market and the economy more generally. Ashburnham Insurance are specialist providers of portfolio Insurance for Landlords with multiple properties. We can cover residential properties let to tenants, houses of multiple occupation, commercial let properties and more. Whether these buildings are a small privately owned investment or a full-time business, we have the right cover for you.

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