How should landlords prepare for Brexit?
The referendum held on 23 June 2016 resulted in the UK voting to leave the EU. It also heralded a period of uncertainty with dire warnings of economic collapse. Every day saw a new apocalyptic scenario played out in the media. Most of the hyperbole was just that. But the uncertainty remained. And the events of recent days have only added to it.
Such is the confusion and even panic about the situation some companies are selling Brexit survival packs. Ordinary people are stockpiling frozen food and even toilet roll. Such behaviour is verging on the paranoid but it does demonstrate the fears surrounding Brexit. Something which our politicians have done little to allay in almost three years since the referendum.
As it stands the UK will leave the EU on March 30. Though given the current political turmoil that could conceivably change. But how can private landlords prepare for life after Brexit? Assuming it goes ahead.
Depending on which side of the fence you stand Brexit will either see economic meltdown or a new golden age of commerce. The likelihood is something in between. The problem of course is that no one knows. And preparing for the unknown isn’t exactly easy.
As far as landlords are concerned there is probably two main areas of concern. The housing market and how Brexit will affect current tenants who are EU nationals. Though there are also real concerns about the post Brexit economy.
The housing market
A recent report from the Royal Institution of Surveyors (RICS) claim the outlook for the housing market over the next three months is the worst for 20 years. Thanks in part to Brexit. According to the RICS their members are seeing a decline in house values. Which isn’t great news for private landlords and their property investments.
The Office for National Statistics seemed to confirm the RICS report by saying house prices have fallen by 0.1% month on month since October 2018.
However, even the RCIS see brighter times ahead (possibly). Simon Rubinsohn, RICS chief economist, told the BBC: "Looking a little further out, there is some comfort provided by the suggestion that transactions nationally should stabilise as some of the fog lifts."
But if private landlords need any reassurance, they should cast their minds back to May 2016. Then George Osborne warned that a ‘leave’ vote in the EU referendum would cause house prices to fall by 18% within two years. The UK voted to leave but the housing market continued on its steady rise.
Landlords in the parts of the country which sees more EU nationals renting properties face the prospect of their tenants leaving the UK. How Brexit will affect these tenants is still a relative unknown. But its probable it will impact on the number of EU nationals continuing to live and work in the country. Landlords may want to prepare to look for new tenants but again the position is unclear.
Other concerns surround the economy, the pound and interest rates. If the performance of the economy forces interest rates up this will naturally hit buy to let landlords in the pocket. Mortgage payments will rise. This in turn could force rents up with tenants struggling to meet the extra costs.
Whatever will be will be
They might be the lyrics from an old Doris Day song but they’re appropriate for the current uncertainty surrounding Brexit. Unfortunately, it’s impossible to know how to prepare for the big event. If you’re a private landlord or indeed a tenant all you can really do is wait and see.
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