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Landlords should not fear Brexit

Monday 04 July 2016

While Brexit triggers shockwaves throughout the country, experts predict that the BTL sector will not be significantly affected as confidence remains high.

Supply, demand and rental costs are unlikely to shift dramatically as a consequence of the referendum vote to leave the European Union, says the Association of Residential Letting Agents (ARLA).

A new survey conducted by ARLA has found that over 65% of lettings agents expect the supply of rental properties to remain stable, while only 20 % believe it will decline if international landlords withdraw from the market.

Well over half of lettings agents predict that demand for rental homes will remain as high as it is now, compared to one third who think that it will decrease as relocating to the UK becomes less attractive to foreign workers.

Around 40 % of agents in London say they expect international demand to fall as the country leaves the EU, while less than 20% believe the Out vote will cause rents to rise.

Rental yields increase

Some analysts believe Brexit will even offer some relief to the sector in the event of house prices falling faster than rent, as landlords’ rental yields would increase.

Problems with obtaining mortgages – thanks to recent legislation by George Osborne – will also be eased as rents would cover more of the interest cost.

David Cox, managing director of ARLA, has warned against the dangers of getting ‘carried away in a zeitgeist’ – wise words in the current turbulence created by the shock Leave vote.

While any changes to the migration policy are bound to affect the BTL sector in the future – especially in London – ARLA’s monthly report suggests that the majority of lettings agents think that ‘the immediacy of this effect is likely to be minimal.’

The Council of Mortgage Lenders advises people to remain calm during the turbulent reaction to the Leave vote and says that the sooner the markets resettle, the lower the impact on house prices will be.

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