Last week at Regent, we – like much of the country – were shocked by the results of the EU Referendum and the aftershocks which are still being felt.
While the political repercussions are still working themselves out, many of our clients are asking us what the surprise Brexit will mean for the property market. Since Friday we have been inundated with newsletters, flyers and brochures from agents and businesses with their predictions on what a Brexit will mean for us. There are many predictions floating around and each day which passes brings different proposals.
Truthfully, no one really knows what will happen to the property markets and all we can do is offer our ‘best-guess’ solutions. The other crucial thing to differentiate between is the short-term and long-term impact of the referendum result. The short-term impact has less to do with the actual result and more to do with the way the marketplace deals with surprises. This has already been felt, with the stock markets tumbling and the value of the pound dropping. The immediate impact on the London sales market has been equally turbulent. There is plenty of anecdotal evidence of domestic buyers pulling out of purchases, or renegotiating sales prices mid-way through the sales process amidst fears that London property will no longer be the great investment it once was. On the flipside, the weakness of the pound should entice more overseas investors although that effect will take a short while to be felt.
On the lettings side of things, we were looking forward to the end of the uncertainty which has characterised the run up to the referendum and which has been depressing the letting market for the last couple of months. This seems set to continue with tenants choosing to extend their current tenancies rather than risk committing to new terms when the immediate future is so unclear. For both markets, these effects should even out once a ‘road-map’ has been created to clearly outline the process the country will take going forward.
However, the longer-term impacts are harder to predict. While most commentators are predicting that London property will remain a desirable location for investors on the sales side of things, there is speculation that the rental market will suffer from decreased numbers of applicants. Whatever the next steps, we are at the start of a period of great upheaval, so for us it is important that we give our clients the most pragmatic advice for their investments. We will be using our years of property expertise to give our investors the edge they need to ensure their investments continue to give great returns over the upcoming weeks, months and even years.