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Brexit could boost BTL as EU citizens delay buying

Friday 10 March 2017

Experts are downplaying fears that Brexit will hit the BTL market, despite warnings the move might spark a mass exodus of EU citizens from the UK

Business leaders and economics gurus discussed the issue at The Great Buy to Let Debate 2017 in Westminster last week and agreed other factors posed issues for landlords. 

Professor David Miles CBE, of Imperial College London, argued that Brexit uncertainty could represent a positive sign for the private rented sector if migrants who were considering buying a property in the UK now postponed that decision and remained in private rental accommodation.

He said: “I rather doubt Brexit will pose a threat - I don't believe there'll be a compelled exodus of EU citizens.”

He spoke about the phasing out of mortgage interest tax relief beginning in April, and calculated that many landlords may have to raise rents as returns are squeezed over the next few years - something which won't help aspiring first-time buyers. 

Jeff Prestridge, personal finance editor at the Mail on Sunday, said that there are bigger factors at play than Brexit affecting the BTL market.

He said that the taxation changes are the biggest concern and we should ‘underestimate them at our peril’.

John Heron, managing director of Paragon Mortgages, said that ‘migration misses the point’ and added that underinvestment in social housing is a bigger issue. 

However, he did say that a marginal reduction on EU migration could reduce the pressure on the rental sector.

He said there had been around a 40 per cent drop in the number of BTL transactions since the introduction of the stamp duty surcharge, though transaction levels had generally struggled since the financial crisis anyway. 

He said: "Let's rethink it, let's reform it now."

The event was hosted by Paragon Mortgages with John Wriglesworth, managing partner at Instinctif Partners, chairing a Question Time style panel.

He asked the room who voted for Brexit and who voted for Remain. In an audience of around 100, 7 people said they voted for to leave the EU while the vast majority said they voted to remain.

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