Waiting For Brexit Before Investing? You Might Be Making A Mistake

Brexit. It’s enough to strike fear into all but the bravest buy to let investor. An estimated 17% of investors have been reported as ‘putting investments on hold’ until the fate of Britain’s departure from the EU is decided. But are they wrong in doing that? A recent report suggests that they are.

What’s happening right now

No-one knows what the future holds post-Brexit. Because of this, many people are putting plans on hold, waiting to see what happens after a deal has been struck… or not. We don’t know what will happen with lenders, whether mortgages will be affected, taxes, legislations and changes to laws and regulations. There’s a lot to worry about.

It’s all down to whether or not we get a no-deal Brexit. Because the prediction is that in that case, we will see a sudden dip in the market. But on the flip side, if a deal is agreed to, we could very well see the market pick up quite rapidly. And it’s this key point that we should, perhaps, be more focussed on.

In fact, landlords might find that the current climate is the ideal opportunity to invest, as there is much less competition, and if you know where to look, there are great deals to be had. Taking advantage of current low prices in the right areas could very well mean that return on investment is higher for those who are prepared to take the risk.

Another thing to consider is that there is a great demand for rental properties, as people are put off from buying homes at this time, and are more likely to rent long-term instead. That is partly down to them feeling that renting a property holds less risk than taking out a mortgage.  There is no shortage of tenants looking for homes, so the chances of having empty properties are much slimmer than in the past.

Seizing the opportunity

A survey recently completed by Censuswide reveals that most respondents believe that the buy to let market will recover, and become stronger over the next 3 to 5 years. If that’s the case, then surely right now is the perfect time to be taking advantage of the current market, seizing opportunities to purchase property to let out, and holding on to those properties while the market recovers.

Waiting until the UK leaves the European Union could mean that those same buy to let properties see a rapid increase in price, meaning that investors get much less for their money, and a lower return on investment.

Estate agents also believe that following Brexit, there will be a flurry of activity in the housing market, which means that there will be less opportunity to grab the best deals.

A stronger portfolio

Of course, if landlords are in a position to invest in buy to let properties now, it also has the advantage of increasing existing portfolios, and therefore increasing business growth. Having a larger number of properties means that while you are waiting for the market to stabilise, you still have money coming in from your tenants.

How will Brexit affect the value of your home or rental property?

Whether you voted to leave or stay, Brexit is beginning to take it's toll on the UK housing market. Which ever way you look at it, we're facing uncertain times; not helped by the fallout from the latest historic events at Westminster.

So, should you be concerned? And could Brexit affect your property investment plans? Let's look at the statistics…

To start with, according to Rightmove, average UK property prices dropped by £5,222 or 1.7% in November with a similar fall forecast for December. These latest statistics represent the largest month-on-month fall since 2012.

But it's not all doom and gloom. Rightmove's figures are skewed towards the London property market and, outside of London, there are areas reporting increases in property values.

If you look at the figures over a longer period, specifically since article 50 was triggered, the UK’s house prices have risen by 8.13 per cent on average (from £215,078 to £232,554), according to latest ONS UK House Price Index report.

Add to that reports by Zoopla that 55% of consumers are still expecting property prices to increase in 2019, there is still confidence in the market.

A recent survey of industry experts also revealed a cautiously positive outlook for 2019. Whilst most expect some short-term volatility, non are expecting a price crash, more a 'softening' of the market.  

Confused?

Well, the simple fact is, that the property market has always been susceptible to cycles. It is not unusual for the property market to go up and down over time. Typically, once it’s been down, it comes back even stronger, and then the cycle repeats itself.

Confident buyers and investors see a market downturn as an opportunity to get a bargain, giving them the opportunity to gain more when property prices go back up again.

So, should you buy or sell now, or wait until the outcome of Brexit is more certain?

That really is up to you. If you need to move, have found the perfect property at the right price and are confident about your finances, there's no reason not to proceed.

Regardless of how you decide to proceed, bear in mind that buying a property is, for most, about securing a home or long term rental income. The property market is pretty resilient, and as long as you’re not looking to buy and then sell immediately, houses tend to survive the bumps in the road.

Please note: This article does not represent investment advice. When buying or selling a property you should seek independent advice. If you have a specific property that you are interested in buying or selling, please contact us to discuss how we could help you.