The British public has taken the monumental decision to leave the European Union. What does that mean for those looking to invest in the UK’s property market?
An Opportunity for Overseas Investors to Take Advantage of the Pound Sterling’s Short Term Weakness
The pound sterling has been strong and stable currency. There is an opportunity for overseas property investors to take advantage of the short-term weakness in the wake of the EU Referendum result. The pound sterling has devalued relative to other currencies but the long term fundamentals are still true: The U.K conducts most of the financial transactions between the USA and Europe. The is no reason why this would not continue. Additionally, the U.K and England in particular have a safe political environment. If overseas investor purchase property during this period of uncertainty it is cheaper in relative terms and the GBP could rebound thereby leading to a quick appreciation and profit for the investor.
Britain Leaving the EU Means Less Competition in the Property Market
There has been much speculation as to how a vote to leave would affect investors and the property market in the UK. Ratings agency Moody’s reported that Brexit would affect London’s housing market the most, as there would be fewer sales to EU nationals which means less competition and subsequently lower house prices. This is good news for potential investors, who can take advantage of falling property prices. Although there may be fewer sales to EU nationals, the UK will no longer be bound by EU regulations of property investing and sales, which could be beneficial to potential investors.
Brexit Means Lower Interest Rates on Mortgages
Economists have argued that interest rates should be set to fall, as the Bank of England tries to stimulate the economy. This is welcome news to anyone looking to take out a mortgage on a property, and even in the run up to the referendum five and ten year fixed-rate mortgages have been at their lowest ever level.
How Will the Leave Vote Affect Student Accommodation?
On the whole, the demand for purpose built student accommodation should not be so affected by the Brexit vote. Although some EU students may be dissuaded from studying in the UK following the result in the fear that they’d be charged the same fee as an international student, EU students account for just 6% of full time students studying in the UK. Furthermore, it’s not entirely clear whether universities will charge EU students a higher fee, UCL has one of the highest number of EU students studying with it and has already announced that it will not raise fees for EU students.
Individuals looking to invest can now take advantage of the economic uncertainty caused by the “Leave” vote, including lower interest rates on mortgages, less competition and potentially more favourable UK property investment regulations.