Prior to the referendum, the lettings market was facing considerable headwinds. A 3% increase in stamp duty on investment properties was deterring many landlords from adding to their portfolios while rents in prime central London (PCL) had fallen by 2.3% as demand finally abated. Since the referendum, that market has changed considerably. Analysts at Benham & Reeves Estate Agents, London’s largest independent letting agency, have seen strong interest from overseas investors keen to capitalise on the falling pound and anticipate strong demand from tenants.
PCL was one of the few areas of the country where stock levels increased in the first two quarters of 2016. Rather than sell, most property owners here can afford to hold onto their properties and let them out. This has led to a steady supply that has softened rental returns. The good news, for tenants at least, was that they had a good choice of properties.
In the advent of the Brexit vote, branch managers have fielded a multitude of enquiries from potential tenants currently living and working in Europe but keen to move to the UK before secession is complete. In the first quarter of 2016, one in four applicants were from overseas. Since the referendum result was announced, the number of overseas applicants has leapt up and now constitute half of all enquiries. The number of new prospective tenants has risen by 17.2% with that figure anticipated to increase further over the forthcoming weeks.
Demand has been strongest in the City, Canary Wharf and east London offices. Most of the new enquiries have been from professionals in the finance sector with many expressing the view that if they relocate to the UK and secure a job before secession is negotiated, they will be able to continue working here. If the free movement of labour is withdrawn, it will presumably be more difficult to gain access to the UK workforce through the proposed Australian-style points system.
“Like many in this country, we initially felt that Brexit would have an adverse effect on the property market,” comments Anita Mehra, “While it may still prove to have a negative effect on the wider property market, the initial reports from our branches indicate that it could actually prove to be of benefit to the PCL lettings market.”
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