The question whether to sell or rent your property would have been easier to answer before June 23rd 2016.
In those pre- Brexit days of steady increases in London property prices, the answer would have been to hold onto your property and rent it out. However, things have changed since the UK voted to leave the European Union.
The problem is not that property owners are deciding to sell up and leave, it is the uncertainty of what will actually happen when the UK does eventually leave the union. Prices have not dropped through the floor, but prime central London areas have seen a slight drop in property values over the past few months.
Some may consider this to be a natural reaction to the relentless rise in London property values, using the maxim of what goes up must come down. However, the majority of people believe it to be the result of the uncertainty of what the UK property market will face once the UK leaves the EU. This general uncertainty has led to uncertainty in the sales market, and this is why many homeowners are considering renting out their property as opposed to selling it. Vendors do not want to make the mistake of selling only to see the prices start to rise again in the future.
Can you let your property?
If you have a mortgage you may be prohibited from renting your property. Many mortgage companies will not allow their clients to let out their homes. Some will allow a limited time for re-letting, usually a year. You should consult your lender for clarification.
If you are prohibited from letting your property, the alternative is to consider a buy-to-let mortgage. However, this will mean the extra cost of mortgage arrangement fees, survey fees, early repayments and possibly higher interest rates. On top of these restrictions, the Bank of England has been given new powers to make buy-to-let mortgages harder to obtain.
Before the referendum
Before the referendum in June, many investors were looking to invest in areas outside of the so-called ‘golden postcodes’. In seeking better value they chose to cast their net wider to places.
For many property investors, the heart of central London is one of the most attractive investment prospects, and remains so. However, since Brexit has been confirmed and stamp duty hikes have occurred, property prices at the top end of the London market have started to cool slightly.
After the referendum
According to CITY A.M, prices in the WI postcode area dropped by 0.83% between July and August 2016. These are hardly panic-inducing reductions in property values considering that demand for property is usually lower during the summer months. While some people will accept this drop as a seasonal variation, others see it as a trend and a sign that inner London property prices have peaked.
Are there alternative markets?
Property investors are being advised to look outside the M25 to find better value for money. Places such as the Medway towns (Kent) and Crawley (West Sussex) are being touted as areas to look to for more affordable property prices.
Major regional cities such as Birmingham, Leeds, and Manchester are also being tipped as areas where prices are beginning to rise.
With all due respect to the denizens of those cities, wonderful as they are, we cannot see them being able to compete with London, and particularly Central London, as an attractive place in which to live and invest in property.
It is an economic truth that businesses or markets do not like uncertainty. It is this uncertainty about what will happen when the break with the EU occurs that is causing people to ask “Should I sell or rent my property in Central London?” Unfortunately, no one can say they know the answer to this conundrum. However, help is at hand.
We feel it our duty to inform people that regardless of what they may read in various articles and online, they should be aware that conditions regarding property and investment opportunities vary from area to area.