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The year-long transition period ended 31 December 2020. This provided ample time to agree to the terms of a new trade deal. After months of complex negotiations, a deal was finally agreed on 24 December. With a new trade agreement and reformed levels of European involvement, the Brexit deal came into effect on the 1 January 2021.
The question now, is how the Brexit deal and this new relationship with the EU will affect the property sector.
What will Happen in the Short-term?
There is still uncertainty around the impact of Brexit on the UK housing market. In the short term, it is quite unlikely to have a major impact on the property sector. In times of uncertainty, people are more comfortable investing in assets which will deliver returns and provide security. Property is a tangible asset and has proven to recover quickly following market disruptions. The UK has established itself as a leading destination in investment, with vast opportunities available. From buy-to let properties to new-build developments. There might also be an increase of international investors if the value of the pound declines because of Brexit.
The country’s economic recovery, including job uncertainty due to the pandemic is more likely to impact house prices rather than Brexit alone. If unemployment rates increase, house prices might fall slightly. In addition to this, the sector predicts house price growth to stabilise in 2021. With house prices declining slightly, this provides the perfect opportunity to invest in property. Currently, transaction levels and house prices continue to climb, as the stamp duty holiday deadline approaches quickly. Therefore, making the property sector a staple investment.
What Does this Mean for the Rental Sector?
With economic disruptions, job uncertainty increases. Resulting in people renting properties for longer. Consequently, the rental market will continue performing strongly with a lower rate of vacant properties. Throughout the global pandemic, buyers have shown great confidence in buying property. It is expected this trend will continue post-Brexit.
A Change in Mortgage Base Interest Rates?
Due to COVID19 mortgage interest rates are at record low levels. Some are forecasting the Bank of England could drop the base interest rates to negative figures, to support the country.
Thus, leading to a decrease in monthly payments for those on a variable or tracker rate deal. Continued low levels of interest rates will prove to be beneficial for first-time buyers, investors and those looking to re-mortgage. On the other hand, if inflation results in increasing interest rates, this could potentially remain at a low level. As the base rate currently sits close to zero, at 0.1%. Therefore, homebuyers and investors could still secure mortgages at competitive prices. However, if prices increase, those on a fixed-rate deal may not be affected.
A Look Ahead
As for the next few months – it is evident house prices will continue to grow, and rental properties will remain in high demand. High numbers of mortgage approvals will level out as buyers rush to complete their purchases to beat the stamp duty deadline set to end 31 March 2021. If you would like to discuss your investment requirements or are looking to invest in the future, get in touch with the team now. Our team of experts will ensure you’re guided through the journey will professional advice.
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