This has been the hot topic on everyone’s lips for the last two years, so how will Brexit affect the housing market? Everyone knows that the housing market since the 2016 referendum has seen a downturn, with the London market being one of the hardest hit areas. Many experts are predicting further doom and gloom when the UK does eventually leave the EU with the housing market being the hardest hit industries.
Home House Buyers have taken some time to have a look at the factors which are contributing to the issues affecting the housing market. We have also laid out our prediction for the future when the UK eventually divorces the European Union.
A lot of people are becoming frenzied over Brexit and what it means for the housing market, we are discarding this as a major factor because it’s not a major factor which we are seeing affecting the industry. The chancellor last year announced some measures to support people to get on the property ladder, one of them being an abolishment of stamp duty for first-time buyers and restrictions put on investors in the buy to let market.
Buy To Let’s
Many investors in the buy to let industry see the taxation, raised stamp duty and high purchase prices being driven by ever-increasing rental costs not as attractive place to invest their money and are in turn walking away from the industry. The return on investment is shrinking, which makes the hassle that a buy to let investment brings looking less and less feasible and are considering putting their money into stocks and shares.
Brexit & Investment
With Brexit hanging over our heads it hasn’t just stalled the housing market. The uncertainty has affected business who would usually invest in services and additional expenditure because of the uncertainty of the impact to the economy when the UK does leave the EU. This is understandable but on the other hand, the country needs these companies to keep investing in the country to make it an attractive place for the EU which will increase the growth within the country.
First Time Buyers
Solicitor Jane Field from Coole Bevis Solicitors states, “An area of the property market which has seen a lot of activity is with new buyers- the new government schemes such as affordable housing and help to buy has seen first-time buyers making a come back because it’s more affordable and accessible for all potential buyers looking at buying a new build property. The traditional and period properties which are usually earmarked for first-time buyers and low-level developers are left to the rental market or not even coming on the market.”
Last year the Prime Minister announced that through the Help to Buy schemes the government would invest an extra 10 billion into the UK housing market. They are predicting this will support an extra 135,000 potential buyers to gain support with owning their own property.
Brexit & Lenders
When it comes to buying a property, buyers are finding lenders are tightening their requirements with deposits being substantially increased. This means buyers are having to tighten their belts even more and are spending more and more time saving, thus stalling the property market further. Buyers are hoping that the government keeps their support in place past the expected deadline for help to buy being 2020.
Brexit & London
As always the London property market is on everyone’s lips within the property industry, the main problem with the market in London is the lack of affordable housing. House prices are over-inflated which nobody can deny, for example, a 3-bedroom terrace property in SE13 Lewisham are being advertised for over £600k. Londoners are moving away from the city to Kent or Sussex which just over an hours commute where for the same price you can buy a 4-5 bedroom detached house. This might be why the London market is starting to see a reversal.
Brexit & Current Homeowners
The question is how will Brexit affect the property market for current homeowners? There is a shortage of houses coming onto the market already, however, there has been a rise in planning application for extensions and conversions to existing homes. Experts are seeing this as a negative to the property market whereas homeowners are seeing this as an investment to their already existing property which they hope will add value in years to come.
It’s no secret that more needs to be done to support the property sector as the UK continues to negotiate new terms with the EU, but those in the property market should continue to be resilient making the UK housing market an attractive prospect once again.