How could Brexit impact letting agents and the private rented sector?
Uncertainty abounds almost four years after the referendum. We look at how Brexit could impact the PRS in this extract from Goodlord's latest e-book, Dawn of a decade: Lettings in the 2020s.
The impact that Brexit will have on the lettings industry - and, indeed, on the United Kingdom itself - remains an unknown almost four years after the referendum.
The uncertainty caused by the drawn out negotiations, however, has already taken its toll on the private rented sector. This is reflected in the changing sentiment of institutional investors, 80% of whom now believe Brexit could be a threat to the PRS, compared to 13% just two years ago. One survey found that one in five property investors was waiting until after Brexit before they invested again. The number of landlords taking out buy-to-let mortgages has also dropped, despite low interest rates, perhaps because it’s possible that costs could rise for buy- to-let landlords if the Bank of England increases its base rate.
But it’s difficult to predict the impact that Brexit could have on landlords, says the National Landlords Association, noting that the weakening appeal of UK investment could see prices drop or the continued lack of certainty could drive up interest in the relative stability of property, while the relative low value of the pound could result in an influx in investment from overseas. “It is likely that landlords with established, well-capitalised portfolios will fare reasonably well," says the National Landlords Association. "However, those heavily reliant on finance may find uncertain conditions more troubling.”
Brexit is providing uncertainty on another front, too, with the government yet to provide clear guidance on how leaving the EU will impact Right to Rent checks beyond the end of 2020. This is a concern for letting agents and landlords alike, given that two-thirds of EU nationals in the UK live in the PRS. On a day-to-day level, changes to immigration policy could reduce demand from those coming to the UK, or drive up interest from those taking advantage of new arrangements with states outside the EU.
The prolonged Brexit process could be putting some tenants off buying a new home until there’s more certainty in the market, meaning more tenants are renting for longer. “People aren't moving as much, and they don’t think that it’s a good time to upgrade, to move onto a bigger property, or to move to a different location,” says David Gilson of College and County in Oxford. Will that impact demand for lettings if and when the UK finally leaves the EU? Only time will tell.