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Can post-Brexit uncertainty offer opportunities for BTL investors?

Friday 29 July 2016

The shock of the Brexit vote has left the UK property market in a state of uncertainty, with more and more buyers unwilling to pull the trigger for fear of a sudden price drop.

Buyer enquiries have plummeted to lows not seen since 2008 and agents have reported that agreed sales have fallen, with more decreases predicted in the short term.

While price falls may well hit London and the East in the next 12 months, the outlook for the longer term is beginning to look more positive.

The RICS UK Residential Market Survey for June 2016 acknowledges the risk of a short-term drop, but offers reassurance for buyers who are, rightly, concerned about property values in the longer term.

Sales activity will almost certainly decline in the next quarter and agents have issued their most pessimistic forecasts for nearly 20 years.

Despite this, industry experts are confident that any drop is only likely to last for the next 12 months - but may persist for longer in London and East Anglia.

Over the next five years, they expect to see prices rise - albeit at a slower pace - with a cumulative increase of 14 per cent by 2012.

Barratt, Britain’s biggest house-builder, is considering cutting the rate at which it builds new homes, following the referendum, because the outlook for the industry appears uncertain.

However, David Thomas, Barratt’s chief executive, said the housing industry in general were in good shape thanks to focused government support, good mortgage availability and an undersupply of new homes.

Will ambitious BTL investors take advantage of the lull to expand their portfolios?

Figures from the Council of Mortgage Lenders (CML) show that lending recovered in May after a sudden drop in the first month of the new Stamp Duty rules.

The value of lending for house purchases was up by 8 per cent year on year in May, at £9.4billion, and the number of loans increased by 5 per to 53,800.

RICs’s chief economist, Simon Rubinsohn, said a crucial factor in how the market performs over the next few months will be the wider economy's response to the Brexit vote.

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