Leaving Europe could decimate a Landlord’s business
Thursday 16 June 2016
Are you in or out? It's a hot topic and I seem to be asked that question every day at the moment. For me the answer is simple, I'm a Landlord, Agent and Investor so I'm staying put. The truth is that nobody can really say one way or the other what will happen if the UK exits Europe but I've always been a great believer that the absence of a plan more often than not results in failure. What I can see is a flurry of massive impacts in exiting Europe that will affect my businesses and for that reason it's a risk that I'm not prepared to take.
So let's explore the potential impacts a little further. Most economic experts agree that the growth in the UK economy is predominantly down to population growth, which in turn is largely attributable to the migrant population, which in turn are predominantly renters. Whilst I appreciate that any exit will surely have a phase out plan, the reality will be a reduction in tenants, a reduction in demand and potentially a lowering of rents. Also let's not forget that one in twenty workers in the construction industry are from non UK EU countries and are most certainly, filling a skills gap and that's just the official figures.
Personally my biggest concern for our sector is the impact an exit from Europe may have on mortgage interest rates. Mark Carney has already expressed his concerns about the uncertainty around interest rates and what is being hinted at here is that an exit from Europe will create a short term loss of confidence in investing in the UK and ultimately a weakening of the pound. If this become a chronic weakening then the consequence could be that the Bank of England would have to increase interest rates, which will ultimately have an impact on the mortgage market, making the costs of running a Landlord business much more expensive.
Another major concern is the impact an exit may have on house prices. Last week, Christine Lagarde, the IMF’s managing director, warned that quitting the EU would result in “sharp falls” in house prices. Whilst this is only a prediction it is very concerning for any Landlord business. Do you really want to the run the risk of devaluing your assets?
In conclusion I would suggest that the impact of the UK leaving Europe could have a significant impact on any Landlords business. Important factors such as where in the country you operate your business, your dependency on finance and ultimately the impact on the UK’s overall economy may ultimately have an effect on whether a business survives or not.
Please note that any opinion expressed by a guest blogger is his or hers alone, and does not necessarily reflect the views of Simple Landlord Insurance.