No one in the UK can escape Brexit at the moment, especially those in the world of property. But within the buy-to-let sector, landlords don’t have a clear view of what impact Brexit will have on them.
A recent survey of landlords taken by Paragon Bank revealed mixed views in the sector. Although 36% believe Brexit will have a negative impact on the overall rental sector, 34% believe Brexit will have no impact and 17% think the impact will be positive. 39% of landlords don’t think Brexit will have any impact on their portfolio at all.
So what does Brexit actually mean for property investors, and in particular buy-to-let landlords?
Decrease in property prices in the buy-to-let sector due to Brexit
Brexit has definitely had an effect on property prices. Although the fears of a full market crash were unfounded, there has certainly been a slowdown in some areas of the UK. Despite this, the number of properties being sold has actually increased. This suggests that buy-to-let investors are taking advantage of lower property prices and better yields.
The search for good yields is also encouraging landlords to look outside of London. Research by Hamptons International shows that 59% of London-based landlords purchased buy-to-let properties outside of the capital last year.
Lowered interest rates
Property purchasers have benefited from record low interest rates since the Brexit referendum. In fact, since the referendum in 2016, the average rate on a fixed-rate buy-to-let mortgage has dropped by almost half a percent. Some lenders have even started cutting up-front fees and offering cashback incentives for buy-to-let investors.
Brexit could also be positive if you’re already a buy-to-let landlord. The ongoing Brexit confusion is causing many buy-to-live purchasers to delay buying a property. This is especially true for first-time buyers. These people still need somewhere to live in the meantime, which could push them into rental properties. This would help increase tenancies and rental prices.
Due to the amount of uncertainty around Brexit, it is important that buy-to-let investors protect themselves. If you don’t already have it, now is the perfect time to consider taking out landlord’s insurance.
Landlord’s insurance will protect you and your property from issues like non-payment of rent, accidents and damage to your property, and loss of earning / rehousing costs. Having landlord’s insurance will ensure your peace of mind while Brexit continues to be negotiated.