It was June 2016 when voters went to the polls to decide whether or not the UK should leave the European Union. As you know, that historic vote ended in a win for the leave camp. In the two-and-a-half years since, there has been no shortage of speculation about what will happen to the UK economy in a post-Brexit world.
As hard as it might be to believe, buy-to-let investing has not been significantly impacted by Brexit fears. Raw data from the Office for National Statistics does show measurable changes in the housing market since the Brexit vote, but those changes have been mostly good. Not only that, they have been good for both individual buyers and buy-to-let investors.
It is worth noting that buy-to-let has proven to be one of the most stable and reliable investments since the mid-1990s. Even during the horrible years of the housing crash, buy-to-let offered a comparably good return on investment. There is no reason to run in panic now. Buy-to-let investing in a post-Brexit world is still going to be a good choice for some investors.
Buy-to-let mortgage deals
One of the many methods we use to measure the health of the housing market is to look at what lenders are doing. Suffice to say that buy-to-let lenders have not drawn the curtains and locked the doors in the years following the Brexit vote. If anything, they have been busier than ever before.
For buy-to-let investors, it’s really a matter of doing a little research to determine which lender offers the highest amounts and at what rates. Shopping around for buy-to-let mortgages is as easy as contacting a mortgage broker and telling him or her what you need.
Also take note of the fact that rates remain extremely low by comparison. It is not as though Brexit fears have caused interest rates to go through the roof. Buy-to-let mortgages are still very rate friendly and affordable. Find the right investment properties in the right neighbourhoods and at the right prices and the buy-to-let investor will still be capable of building quite an impressive portfolio once Brexit is complete.
Post-Brexit house prices
Another unwarranted fear among Brexit sceptics is that once the UK leaves – with or without a deal – housing prices will plummet. Fortunately for investors, the data thus far does not support those fears. In fact, it is quite the opposite.
Statistics show that house prices have been climbing for the better part of seven years. It is true that the rate of growth has slowed considerably since the 2016 referendum, but growth has turned neither stagnant nor negative. House prices continue to rise.
It has been argued that the falling rate of growth that kicked in just after the referendum was nothing more than a market correction that balanced out the explosive growth between 2012 and 2016. Such thinking makes sense when you look at actual volume.
According to the most recent numbers from HMRC, there was a significant drop-off in volume immediately following the referendum. But we have since recovered. Believe it or not, volume was greater in January 2019 then it was the year before. The fact is that people are buying houses and prices are still rising.
Buy-to-let in London
The data suggests that Brexit fears as they relate to buy-to-let investing are unfounded. In fact, the UK’s separation from the EU could actually be a very good thing for investors in London. Again, the data tells a story different from what you hear in the news.
Given that London is so pricey to begin with, it appears as though buyers are holding off making purchases in the capital until there is a bit more certainty about the future. With volume dropping off in London, there are more opportunities for investors to buy properties at lower prices. It’s expected that when worries do finally settle down post-Brexit, volume and pricing will both start moving up.
A good look at the London market reveals that rents are very attractive right now. Why? Because Londoners unwilling to buy right now still need a place to live. The demand they are placing on the rental market is very good for prices. And should growth resume in post-Brexit London, as is expected, it could only mean growth in rents as well.
The data does not suggest a downward trend in buy-to-let following our separation from the EU. If you had a mind to buy property in London or elsewhere, don’t be dissuaded by Brexit fears. At least look at the possibilities. Data shows that buy-to-let investing should continue to be one of the most stable and reliable investments for years to come.
Leave a Comment