Gill’s Thoughts On Brexit And The Property Market
Well what an extraordinary month we’ve had since I last wrote a blog post!
I can’t have imagined such a series of events as we have seen – and totally unexpected of course. My only fear is that if we had the BREXIT vote again today, the result would be quite different and I have seen so many reports and tweets from people who wish now they had voted remain. Sadly that means the country is going to go into a leave routine that the majority of people actually don’t want. But I see in the news today that Oliver Letwin who is going to control our exit negotiations as the head of the Whitehall Brexit Unit, has said that he believes we need a parliamentary vote to confirm the exit legally. That might be a very interesting and difficult process as we know that approximately 500 of the 650 MPS are ‘remain’ believers, so at the very least I can see that they may drag their heels on that and I also read today that the two year exit time scale that we have all been talking about is in fact also negotiable and could take a great deal longer – and in fact when Greenland left what was the equivalent of the EU in 1982 it took three years not two.
So as investors we are heading into a fairly long period of change and uncertainty – but that’s on a macro economic level. And what I mean by that for example, is this: if you don’t export or travel abroad the price of sterling and whether it’s up or down today – has no real impact on you – because your personal or micro economy isn’t affected by it – and when the press write, they tend to write on a macro economic level and so most ‘ normal’ people are impacted by that when they should be thinking on a micro – or more personal level.
And to talk about property specifically we know that people have to live somewhere whatever is happening to the outside world or economy. Shelter, food, drink and safety are needed as a minimum whatever is happening in the larger world around us, so fundamentally the state of our property market hasn’t changed. However there will be change because the residential purchasers – our Dom and Doras will be frightened by the news and will sit on their hands and not move or buy and as a consequence the property market is likely to stagnate and even drop a little.
But again we mustn’t be caught in that trap either. As professional investors who evaluate cleanly and precisely and without that fear or emotion – the property market is pretty good at the moment. A stagnant residential market is good news for us – we can generally buy our properties slightly cheaper and the demand for rental goes sky high as Dom and Dora rent rather than buy.
And we have a champion in that statement with Mr Mark Carney who this week in his six monthly Financial Stability statement warned that IF the property investors leave the market and sell up – there could be a housing crisis, and of course he’s right. We as professional landlords are providing a significant proportion of our country’s housing – and that proportion grows on a daily basis – and Mark Carney knows that we are key to housing provision in the UK now and increasingly in the future. He knows, as we all do, that the scaremongering type of journalism that frightens investors out of the market is counter productive and he has a fine tightrope to walk. We know he wants to scare off the amateur investors (and the recent legislative changes were evidence of that) but he can’t frighten off the professional investor or people will have nowhere to live.
I suspect in retrospect and with a crystal ball – the government would not have pressed on so quickly with the changes in legislation in the investor market so aggressively had they seen BREXIT coming and to that end I suspect we might see a slight softening or slow down in their approach there.
And whatever happens there we are perfectly placed to be at the forefront of housing provision in the future: at Fielding Financial we have the understanding, the knowledge, the qualification, and professionalism to be significant providers of appropriate housing in this country – and that means we have to keep buying – and the market is perfectly poised to do that NOW!