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Uncertainties Surrounding Brexit and Investment in the UK Property Market

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There are many ambiguities surrounding leaving the European Union, the property market for investors being one.  The UK has certainly established a very secure legal process over the years, establishing full security for British proprietors when purchasing their property, an attraction for many property investors worldwide, but as we prepare to leave the European Union are there divided opinions on how it will effect this reliable security?

Boris Johnson’s Brexit

Before we build on the ideas behind how Brexit may affect the property investment market, it’s important to discuss the approach on how the UK’s Prime minister has intended to leave the European Union. Boris Johnson has left the door open to coming out of the EU on World Trade Organization terms, after his foreign secretary, Dominic Raab, said it was ‘’absolutely’’ right to keep a no-deal outcome on the table in trade talks. When Johnson was asked regarding the ambiguity of Brexit he replied by saying ‘’We have a great deal. It’s going to allow us to come out smoothly and efficiently’’, hoping to gain the trust of many economic investors.

Is Brexit an opportunity or a threat for property investors?

Although mystery prevails over the uncertain legal outcomes and economic changes of Brexit for property investors, a recent Global Survey done by the real estate department in KPMG reveals that 46% of people at the MIPIM (an annual international property event) said they will continue to invest on the same level in UK property post-Brexit.

Although this may be the decision for some investors, opinions are not short of divided. The remaining 44% of investors said that their organisation is likely to slow down investment, leaving 10% to say that they are looking to stop investment completely as a result of the economic uncertainty. Many overseas investors view Brexit as an opportunity, due to the cheaper pound and less competition from other buyers, and believe that it will not have any material effect on the market in places like the global financial city of London.

The certainty that Brexit will not affect British property investors is supported by the High Court case of Canary Wharf T1 Limited and Others v European Medicines Agency  where it was decided that Brexit will not act as a frustration for corporate companies to exhaust their leases with their landlord. Mr Justice Smith spoke and said that ‘’since the effect of frustration is to kill the contract and discharge the parties from further liability under it, the doctrine must not be lightly invoked and must be kept within very narrow limits’’, supporting the UK’s history of a secure legal system for property investors post-Brexit.

Property will continue to be the UK’s most popular and reliable investment asset

Since the UK decided to vote to leave the EU during the referendum held in June 2016 the UK housing market has already shown signs of slowing down. Whilst the values of property have remained relatively steady, there are fewer transactions taking place, highlighting a slowdown in the UK housing market for many investors who were once drawn to the potential long-term capital growth of property investment rather than intangible stocks and shares.

Despite this, a recent survey of 500 buy to let investors carried out by MFS (Market Financial Solutions) discovered that since the EU referendum, 64% of investors have not let Brexit impact their property investment decisions, leading to 45% even expanding their property portfolio, only 7 % selling one or more properties as a result of the Brexit scare and 57% confident that they will not be changing their property investment strategy following the departure from the EU.

According to a recent article in The Guardian on the four stocks that could soar after Brexit, political stability has fed through to the currency and the government is to push on with its spending plans, allowing investors to benefit from secure asset investments like property. They believe property will provide a more resilient economy, warning people now is the time to invest, a clear sign that property will continue to be the UK’s most popular and reliable investment asset post-Brexit.