As the final date for the UK leaving the European Union moves closer (29th March), most elements of the post-Brexit world are still uncertain – not least the private rental market. As a landlord, you may be wondering if your rents will be affected, or whether it’s a good time to invest in a new buy-to-let property. We’ve gathered together some predictions and advice about the future of private renting, to help you out during these uncertain times.
What will happen to rents?
There are numerous factors that could affect demand for rental properties after Brexit. For example, in some areas where historically lots of EU nationals or European students have lived, demand may decrease and landlords may find themselves in an over-saturated market. In other areas, demand for rentals may hold steady or even rise as people hold off on buying properties until they’re more confident about the future of the economy.
Another knock-on effect to consider is the potential for tenants’ earnings to decrease if there is an economic downturn. Alexandra Morris, Managing Director of online letting agent MakeUrMove, has said, “With the private rental sector dominated by a large number of small landlords who often operate on very tight margins, or even run at a small loss, instability could leave them in difficult financial situations.” Now may not be the time to make big changes to your rents, then, but (like the homebuyers) to wait until the post-Brexit dust has settled.
What will happen to house prices?
As Brexit approaches, the Bank of England has warned that house prices could drop by around 30% if the UK leaves without a deal and the economy suffers as a result. Of course, this is only a prediction for the very worst-case scenario, and the reality is likely to be less dramatic than that. For landlords, this will mean a drop in the value of the properties they already own. However, a fall in house prices could present an opportunity to purchase a new rental property, which could prove to be a savvy investment, provided the housing market picks up again later.
What do we know for sure?
The key takeaway from all these predictions is that nobody knows for certain what is going to happen to the private rental market after Brexit. Experts disagree and reports are inconclusive, because this is brand new territory – no country has ever negotiated leaving the EU before.
As a landlord, then, it is up to you how you respond to this uncertainty. On the one hand, it offers certain opportunities to those willing to take a risk, so if you are in a position to do that, this could ultimately pay off for you. On the other hand, no guarantees can be made about the post-Brexit private rental market, or the housing sector at large, so the wiser course of action may be to wait until the impacts of Brexit have become a little clearer before making any major changes to your portfolio.
This is best summarised by Martin Lewis from Money Saving Expert, who says, “The only thing that is certain for the economy at the moment is the uncertainty [so] when you’re making any decisions, you have to factor in the chance of substantive change. Rather than trying to second-guess economic shifts, it is best to focus on your own personal finances, which are more controllable and predictable.”
Do you have a property to let in Bristol? Gough Quarters can help you navigate the rental market, before and after Brexit, so contact us today to find out how we can help.
Big Ben by James Newcombe on Unsplash