Pros and cons of property investment after Brexit

EU Flag Brexit

It’s safe to say we’re all looking forward to a time when Brexit is no longer a word we frequently have to use, when we can make decisions and discuss the future without the B word cropping up, when the impending exit from the European Union isn’t hovering in the background making us wonder of its impact.

Impact of the referendum

Since the referendum in 2016 the UK property market has seen a slow in price growth, a period where growth stagnated.

The general consensus amongst industry experts is that even if property prices should dip in the immediate aftermath of the departure from the EU they will eventually rebound. Some even believe that the UK property market has already pre-adjusted for Brexit.

Investors who choose to purchase rental property in the period before, during or immediately after Brexit might in fact be buying property at a bargain rate that they will see excellent returns from once the market recovers.

Below we consider property investment at a time when Brexit is centre stage.

If not now when?

What is your motivation for buying a property – if it truly is investment there’s surely merit in considering buying in an uncertain market and taking a calculated risk?

We all too often hear of those with regrets of not buying property in previous periods of uncertainty.

The best part about buying now is that where others are sitting on their hands there is the potential to secure a deal. If you’re in a position to purchase during a period of uncertainty many experts would tell you to take the opportunity with both hands.

It’s not simply a case of ‘any property will do’, investors buying in an unpredictable market must be more diligent. Conducting thorough research on an area, the local property market and the property in question before committing to a purchase is advisable.

Stable long term investment option

Historically, real estate has been considered one of the best places to put your hard-earned money to work, having been an asset class that has performed well over time.

Stocks, shares and other assets tend to fluctuate in value much more frequently and often waver far more easily than property – ultimately everyone needs somewhere to live and demand for homes is increasing as the population rises and the national housing shortage continues.

Over the years property has proven to be a more steady asset, despite the rise and falls of the economy overall UK property investment remains attractive with global demand increasing in the long-term. Whilst property prices do fluctuate overall they are more resilient to economic change and continue to rise over the years.

Cost of buying a property in the UK

A ‘con’ to stand up to all the positives in favour of buying a rental property at the present time is the cost of buying property in the UK. Whilst the property taxes such as Stamp Duty Land Tax are not the highest in the world, they are a cost involved when buying property in the UK which is payable upfront.

Property prices generally in the UK may also be higher than other locations across the globe. Where London was once the main focus for investors there are several other areas which are ripe for investment and are standing out over the properties in London which have significantly higher price tags and therefore increased associated costs.

Opportunity outside of the capital

With Stamp Duty Land Tax being calculated on the purchase price of the property there is merit in considering properties situated in locations where property prices are lower. This is not the first reason investors consider locations outside of London but it is definitely a valid factor.

A recent poll by Reuters cited that prices in London will fall this year due to the uncertainty surrounding Brexit and the General Election deterring buyers.

Areas outside of London are now spiking interest from investors looking for locations that offer better rental yields, prospects for capital growth and also have a lower entry price point.

Holiday investment property

Looking for new ways to invest in property many are turning to holiday property. There has been a sharp increase in the number of Britons choosing to take a staycation rather than travel abroad.

With the pound (GBP) currently weaker than it has been historically holidays abroad are often more expensive and so many are choosing to rent a holiday home in the UK for their break.

With demand increasing and set only to increase further in the wake of Britain’s departure from the EU this type of investment should be a serious consideration for property investors.

Buying investment property

If you’re considering buying a rental investment property in the UK our team of property consultants would be delighted to help. We’re available to talk through your plans for investment on +44 (0) 2039507939 or send us an email at info@thirlmeredeacon.com.

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