The idea of Brexit actually leading to a new kind of property boom seems a crazy idea. But this is a crazy (if serious) situation. So let’s run through a few reasons why, in some perverse way, Brexit could actually benefit the property market:
… Lower interest rate. Many experts are now suggesting base rate could fall, perhaps to 0.25% or even zero. Money has been cheap for six years already. Anyone with the ability to borrow money could be able to borrow it for, literally, next to nothing.
… Consider also the impact this would have on savers. Even with lower potential yields as a result of tax changes property could still look a much more attractive home for your money. Here’s the potential choice: 0.25% in a savings account or 5% from even a very modest buy to let.
With, possibly, a new government and a new Chancellor in place could the recent punitive buy to let tax regime be rolled back?
… Possible boost to the rental market. Economic uncertainty and the risk of falling property prices could make lenders even more cautious about lending …. with even larger deposit requirements, less favourable LTVs and falling property valuations. All this could actually serve to push up demand for rental property.
… The return of the foreign investor. Foreign investor demand in UK property has cooled of late, as a result of rising prices and tax changes. But the falling pound could make UK property attractive once again. UK property became around 8% cheaper to foreign investors overnight on 23 June – some commentators are suggesting another 10% fall.
… While it’s impossible to deny that Brexit presents a severe risk for the property market it’s also important to be aware that, for some people at least, it will present an opportunity.
What do you think? In these uncertain times the only certain thing is that no one really knows for sure. Whether you agree or disagree Property Insider welcomes your views on Brexit. Feel free to add a comment or drop us an email with your views.