There is no doubt that the endless story of Brexit is having an impact on the U.K.’s overseas reputation. Countries looking to do trade deals with the UK, after leaving the EU, must be rubbing their hands with glee. The UK is on its knees, Parliament cannot make up its mind what it wants and we have a government which has been unable to govern. Today’s announcement of a general election on 12 December will offer some short-term respite but what about damage to the UK property sector?
UK’s international standing
The UK has one of the largest economies in the world hence the reason why the route out of the European Union has been blocked at every turn. Unfortunately, despite the fact that there was a referendum in favour of leaving the European Union it seems that politicians know better than their constituents. It is safe to say that the world is looking at UK with a degree of humour and puzzlement, how could the country get into this state?
Since the referendum back in 2016 there has been a significant reduction in the value of sterling against the likes of the dollar and the euro. There has been a slight recovery over recent weeks but there is still a significant advantage for overseas investors looking to acquire UK property, compared to 2016. Will investors disappear as and when sterling recovers?
UK still has long-term potential
While those opposing Brexit continue to talk down the benefits of a UK free from EU shackles, long-term investors think otherwise. Yes, a reduction in the value of sterling has increased overseas investment but many would have invested even at high exchange rates. The UK has a population of circa 66 million and growing. This has created:-
• Exceptional demand for rental properties
• Strong demand for new builds
It is worth reminding ourselves that the number of newbuilds in recent times has not even fulfilled short-term demand let alone the significant backlog. Therefore, those predicting a collapse in the UK property market may need to think again. Yes, there has been damage to the U.K.’s international reputation but in the years to come Brexit will be long forgotten and we will be focusing on short, medium and long-term prospects again.
Looking beyond the doom and gloom
If you strip away the emotion, your opinion of Brexit and look at the UK property market in the cold light of day, what do you see? Suggestions that EU immigration to the UK will literally end overnight are well short of the mark. Instead, once the transitional period is over, Europeans looking to move to the UK will simply need to go through the current international immigration process. So, the UK population will continue to grow and demand for property increase, which will create numerous opportunities for brave forward-looking investors.
In tandem with a company issuing a short-term profits warning, but still having significant potential going forward, the UK is suffering at the moment. The effective paralysis of Parliament has not encouraged an increase in domestic investment in UK property. Many believe there are significant cash piles waiting to be drip fed into the UK property market as and when we see an end to the Brexit debacle.
Reputational damage? Well, it is safe to say the UK has not benefited from the current Brexit process but the long-term potential for investment in UK property still remains.