Following the UK’s decision to exit the European union, those with an interest in the London property market can expect to witness many changes amidst a time of impending economic uncertainty. Such changes have been almost instantaneous, currency being the most obvious as the pound immediately becoming weaker and potentially rendering the UK less attractive to foreign investors. The impact on the stock market could make lenders more conservative, impacted further by new criteria from the bank of England concerning buy-to-let lending. All of this could significantly impact availability, most of all in London.
House builders will face difficulty in borrowing money, meaning less housing availability to satisfy a growing population, driving house prices up as building targets are made more difficult to be met.
House prices and rental prices will increase, meaning more people may also consider more short-term lets. Air b’n’b becomes a more attractive and lucrative solution for landlords wanting to maximise the value in their property, particularly in more desirable areas.
The immigration impact will also boost the preference for short-term lets, as the government will presumably need to pass a third immigration bill, which in turn will make permanent dwellings more difficult for people travelling from outside the UK. This will also increase regulation of landlords as more documents are likely to be required, which could cause confusion as definition of permanent & time-limited rights to rent will need to change. Should a points-based system, as suggested by leave campaigners, be implemented, it will certainly favour those in a stronger economic position.
Although the full implementation of article 50 will take some time, we’re witnessing preemptive responses from right now. The implementation of other legislation around housing, including the housing and planning act, will also surely be delayed whilst key aspects of the EU exit are worked out. The current EU legislation will need to be replaced with a United Kingdom version, including regulations around the manner in which agents provide consumers with services. For now, at least, the EU regulations stand and the changes will take some time to come into effect.
Landlords, agents and investors are advised to remain conservative and ready to adapt, although any significant changes will take some time to come into effect. Whilst London property prices in general continue to rise against a housing shortage, luxury property investors seem anything but deterred, with London remaining one of the most expensive places to both rent and buy in the world.