The latest report from the Association of Residential Letting Agents (ARLA) shows that the buy to let rental market remains stable post Brexit announcement.
77% of letting agents saw no change in rents as a result of the announcement, whilst 12% of letting agents reported an immediate dip in rent. This contradicts expectations, as before the result 19% predicted rents would increase, and 20% expected them to fall. 61% thought they would stay the same.
Supply and demand has also so far been unaffected with 67% of letting agents seeing no change in supply and 64% reporting no change in the number of people looking to rent. Scottish letting agents have reported a surge in interest from landlords in recent weeks, showing the confidence in the Scottish market.
Lenders are continuing to offer very good rates on buy to let mortgages which is proving to be attractive to Scotland’s many landlords and investors, who typically reside within Scotland.
Robert Young, author of the Scottish Property Blog series says “Inch by inch, we are beginning to see what life will be like in the post Brexit vote world and there is evidence that life will continue .... as if it wouldn’t. There is not enough housing being built to satisfy the increased demand for housing – this supply and demand imbalance will not be fundemantely affected by the aftermath of the Brexit vote, whatever the aftermath may be”.
It is worth bearing in mind that for the majority of people property investment is a long term (10-20 year) strategy. If this is so, then it is a case of weathering the storm, and things should be OK. In the long term things will pick up if there is a blip. Currently buyers are being a little cautious which may present itself as an opportunity as fewer people will be jumping in with both feet.
RICS , the surveyors’ professional body, has published advice on its website to members about valuations post-Brexit. It strongly implies that surveyors may be in danger of stating too high a price in their valuation reports. It suggests a form of wording which essentially advises customers that the valuation may not be reliable as the “probability” of that price being achieved in the event of a sale “has reduced”. So what does this mean for buy to let property investors? It means that sellers are more likely to be open to price negotiation at the moment so you could ‘bag yourself a bargain’!
In summary, we don’t know what the effect of Brexit will be on the local market yet. We don’t know how long it will take to trigger Article 50 and, once it is triggered, we don’t know how long it might take to sort all of the issues out. However, if we look at the performance of the rental market (see accompanying newsletter article on the Private Rented Sector) we do know there is a huge and growing demand for rental property.
For now the rental market remains calm, with no immediate fallout. The government needs to incentivise landlords to stay in the Private Rented Sector, and needs to encourage institutional investors to stay in the market. If these 2 groups pull away, tenants will be further affected as the lack of supply (which is already chronic) will push up rents.
The Edinburgh Property Blog will keep you posted on any post Brexit changes if and when they happen.