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The Impact of Brexit on UK Property Investments

Property Investments

When the Brexit process started, there was a whole lot of uncertainty in the UK property market. Buyers, investors and homeowners were not sure of what to expect in the future; will the price of property rise or fall? There was one thing on every investor’s mind, is now a good time to enter the market or is this the right time for a quick exit? Due to the uncertainty and the volatility around Brexit, there was certainly an impact on the stock market as well as the value of the pound. So, would Brexit impact the real estate market in the UK too? Here is what the experts have to say regarding the impact of Brexit on UK property investments.

Impact of Brexit on domestic jurisdiction

Legally speaking, the real estate laws in the UK are governed within domestic jurisdiction which means there was no interference per se with or without Brexit. All legal formalities and documentation requirements, be it land ownership laws, rental laws, stamp duty land tax, land registration laws or even mortgage approvals and interest rates have remained essentially unaffected by the Brexit deal. So, be it estate agents in Doncaster, homeowners in London or property investors in Leeds, they were not impacted by Brexit. Technically, the increasing rate of inflation in the UK, the impact of rising property prices and the increase in living costs will play a larger role when we talk about their impact on property investments in the UK, as opposed to the impact of Brexit.

The impact of Brexit on overseas investments

In fact, the devaluation of the UK sterling actually made property investments in the UK a lot more attractive and more affordable, especially for overseas buyers and investors. While some investors were still waiting to figure out the longer impact of Brexit on the UK property market, many buyers and overseas investors took their chance by investing in the property market in hope of earning a hefty profit in the short term. In fact, before Covid-19 hit, the number of investments that were pouring into the UK had reached a record high. A majority of investors that were interested in investing in the UK property market post the Brexit deal were actually from the Gulf and the Middle East. This was essentially due to the weaker level of the Sterling coupled with pent-up buyer demand, and of course, the prediction that property prices in the UK were set to rise in the coming years.

The impact of Brexit on supply and demand

Once the Brexit deal went through, several EU citizens decided to quit their jobs in the UK and take up a job elsewhere in Europe. Due to this, there was suddenly a large supply of flats, homes, penthouses and townhouses, some of which were being sold at relatively affordable prices. Many EU workers who were staying in the UK as tenants also left, which suddenly meant an increase in the supply of rental properties. Despite this, after the whole process of Brexit was complete, we saw a sharp increase in the demand for properties in the UK and the supply could not keep up which eventually led to an increase in property prices.

The impact of Brexit and Covid-19      

As of now, market experts are predicting that the UK will become one of the fastest-growing economies in all of Europe in just 5 years. With an influx of development projects, a large number of upcoming residential buildings and the UK government’s multiple attempts to boost the UK economy, it is safe to say that real estate in the UK will be booming in the coming years. In fact, cities in the UK such as Leeds, Manchester, Birmingham and Newcastle are going to become some of the most sought-after areas to invest in, by local and international buyers alike. A market survey also found that due to the lockdown that was enforced in the UK during the Covid-19 pandemic, there was an excess of £100 billion in savings which led to an increase in spending once the lockdown was lifted. As we have seen, there was a sudden increase in buyer demand once the lockdown lifted and the average price of property in the UK rose by a whopping 10 per cent from November 2021 to November 2022.

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