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Could Brexit be good news for landlords?

11th March 2019

2019 is proving to be an unpredictable market for properties in the UK. As with many other industries, people are hitting pause in anticipation of the outcome of the Brexit deal. Evidence suggests that over the past few years, people putting a mortgage down on a property has fallen, and continues to do so, while people renting privately is rising, at roughly the same rate.

This of course, is not all down to the Brexit effect – the rise of house prices over the past decade will always determine the number of house sales, in part because there have been some major changes in both economy and regulations, making it harder for the new generation of 20-somethings to make their way onto the ladder. But it seems, those same threats are encouraging people to take the less risky, and more flexible option, of renting. And it seems logical that the fear of Brexit has had quite an impact.

The 2019 rentals market

Property experts predict that we will see these trends continue into 2019, which will see the market slow down at a steady rate. In contrast, this proves to be a positive for property investors and landlords, because those same experts are predicting that the uncertainty of Brexit will further fuel the huge demand for rentals in the UK, particularly in the private sector.

Figures show that across England and Wales, the number of rentals has risen by 17.4% year on year, and 24.6% in London.

It seems then, that Brexit is having no effect on the rentals market as a whole – demand is still growing for good rental properties and looks set to continue to do so.

Ongoing shortages

Contrary to the belief that rentals will begin to decline following less migration from Europe post-Brexit, there is still a huge shortage of affordable rental housing due to the ongoing chronic undersupply and difficulty in getting a mortgage due to new restrictions. This doesn’t appear likely to let up, as Government intervention makes it more and more difficult to purchase property in the UK with new legislations and tax changes.

There is more demand than ever for rentals, and that demand has increased since this time last year, and some experts are advising that property developers take advantage of the current climate and levelling house prices while they can. We are still in the very strong situation whereby the income from rents is significantly more than the cost of buying a property even with a mortgage attached.

The next five years

Along with the increase in the number of rentals, it has been predicted that due to the sheer demand of rental properties, the price of rents will increase by around 15% in the next five years. This is from a report published by the Royal Institute of Chartered Surveyors.

It ties in with the increase in demand, of course, but also follows the impact of taxes in the buy-to-let sector, which is affecting landlords decisions in buying property. This in turn is creating a further shortfall, which is having a knock on effect on the rental demand.

It seems evident that for those landlords and property developers who are able to stand firm through the current uncertainty, there could be rewards to be had, as there will never be a shortage of people looking for properties to rent.

Sally Lawson CEO of Concentric says, “after 3 decades in the rental sector and at least 2 recessions, the rental sector has held firm, never waning, with steady growth every year since 1987, and predicted to grow from being 20% of the entire uk housing stock to over 50% by 2050, I see no signs of this trend changing in the near future, Brexit or no Brexit, people have to live somewhere”

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