In a shock result, the UK’s general election returned a hung parliament which pretty much sums up the country’s concern with how the Brexit negotiations have been progressing. It wasn’t the only issue of course, but securing a strong position for UK trade and investment once it has left the EU is a priority for most, and the results have been seen as a vote of no confidence in the current government’s tack of a ‘hard’ Brexit.
The consensus is that Britain is facing its biggest challenge yet with Brexit. Concern over the negotiations has pushed homeland policy to the backburner while Britain tries to secure a good deal for continued trade and investment in Europe. In fact the snap General Election has hinged on which political party is best placed to negotiate the leave and was called by a government keen to strengthen its majority. This didn’t happen so now the government is facing (amid a hasty reshuffle and coalition negotiations) the prospect of renewed EU negotiations for a ‘soft’ Brexit.
The Brexit vote itself (in June last year) had a significant impact on the property market. The FT noted that estate agents saw a sharp and significant drop in buyer interest and the funds that were in danger of collapse were frozen in the immediate aftermath of the vote. The vagaries of house values have always made the market vulnerable and the decision to leave the EU clearly unsettled investors and lenders. However, as is often the case, the housing market recovered quickly with both buyer interest and prices rising steadily.
Britain’s housing market has a safety net, of sorts, in that demand continues to outstrip supply. The housing stock shortage is so marked that it has become the focus of much political debate with the House of Lords calling for 300,000 new homes to be built a year in England alone. In 2016, house building was up by 4% with the number of new homes under construction totalled 147,880, by the end of the year, 190,000 new homes had been added to the stock – the highest since the financial crash – but it still isn’t enough. The Royal Institution of Chartered Surveyors (Rics) reports that the number of properties coming to market continues to fall while buyer numbers continue to rise.
In addition to a housing stock shortage, house values have risen exponentially – not a problem for those who prefer to rent but bad news for those looking to buy who have been priced out of the market. A good compromise then, is the call for developers to reconfigure properties so the rooms are smaller and more affordable for first-time buyers.
The UK has long been considered a property investor’s paradise; government measures (such as the reduction in mortgage interest relief, the removal of the 10% ‘wear and tear’ allowance and the 3% addition in Stamp Duty on any property that isn’t the main residence) have sought to temper buy-to-let’s dominance. The Brexit effect however, has seen a renewed interest from overseas investors thanks to a strong rental market a weak pound. The reduction in the terms of tax remittance on worldwide assets and capital gains tax on UK property held in offshore trusts thankfully hasn’t dampened foreign investors’ enthusiasm for the UK property market. The Stamp Duty tax rise of 3% has however, caused many to take a pause. Buy-to-let landlords will have to adjust their budgets or their property goals to factor in this significant additional cost. Property Divas works with financial advisers, property developers, buyers and sellers which means the team is best placed to assess the market on your behalf, give honest advice and source the right property for your budget. It may be wise to make an appointment to discuss your needs before you begin your property search.
Affordability and housing-stock shortage are the biggest challenges currently facing the UK housing market. The outcome of the Brexit negotiations will be keenly felt by homeowners, landlords and first-time buyers because of its effect on property value and investor (both domestic and foreign) interest in the market. One thing is certain, without a parliamentary majority, how the British government progresses in its Brexit negotiations will be very different from now on.
If you would like strong property advice in uncertain times or a valuation and budget assessment that you can rely on, then speak to the Property Divas.