Why buy to let investors aren’t phased by Brexit uncertainty

Since the Brexit referendum in 2016, the economy has been struck by uncertainty as the government struggles to agree on a suitable withdrawal deal. However, a recent survey has revealed these worries haven’t affected those with buy to let portfolios.

Why buy to let investors aren’t phased by Brexit uncertainty

Naturally, the property market has been under intense scrutiny since it was announced that the UK will be withdrawing from the European Union (EU). There was temptation amongst buyers and sellers alike to take a ‘wait and see’ approach when it comes to property; however, according to recent findings, investors in today’s market are completely unaffected by Brexit and are expanding their portfolios further.

The survey, from Market Financial Solutions, showed that 57% of respondents aren’t planning on changing their investment strategy after the Brexit deadline, and 64% said that they won’t let Brexit impact their investment decisions. Some were even looking to expand their portfolio in the imminent future, with 29% saying that they are planning to invest in more properties immediately after the UK leaves the EU.

Furthermore, 45% of respondents said they have expanded their portfolios since the referendum and only 7% said that they have sold as a direct result of Brexit.

These results are probably surprising to many, considering that the general consensus after the referendum was that Brexit will spell doom and gloom for the economy, including the property market. However, the market for bricks and mortar is performing well and buy to let investors are clearly making the most of this.

House prices have, for the most part, done well in the run up to Brexit. In fact, the country saw a steady rise in house prices since the referendum in 2016. Although the growth has been very slow in some areas, the overall picture demonstrated a high level of resilience to the Brexit uncertainty. According to the Office of National Statistics, the average house price was £214,000 in June 2016 at the time of the referendum. By January 2019, this figure had increased to £228,000. On top of this, recent projections from the Office for Budget Responsibility suggest that house prices will increase 4% year-on-year between 2020 and 2025.

The current imbalance between supply and demand has also played a major role in buy to let investors’ confidence in the current property market. The number of people looking for residential properties is currently out-weighing the number of houses on the market.

The government plans to build 300,000 new homes by the mid-2020s but, as it stands, this is not going to be achieved. This has worked out well for the buy to let market, because it increases house prices and it gives investors the perfect opportunity to invest in new builds and gain excellent returns from them.

Obviously, it will be hard to predict how the property market will hold up post-Brexit, but the outlook is good for the foreseeable future. With this in mind, buy to let investors looking to expand their portfolios should feel encouraged.

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Liverpool Guide vertical - April 2019

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