How will Brexit affect the lettings industry?
03 Dec • Insight
We know many of you are probably sick of hearing the 'B' word, but we all know that it's going to cause radical changes in the UK, both personally and, more importantly, from a business perspective. With that in mind, we believe it's only prudent to share some industry insight into how leaving the EU will affect our industry.
One of the key issues for many sectors, is the high level of EU nationals who companies employ and the potential of a huge shortfall in the workforce that may arise after we leave the block. For healthcare, contingent work and many others this is a major problem, but a governmental study highlighted that only 3% of the lettings workforce are EU nationals – with the industry being primarily domestic. If you employ or are an EU national yourself though, there is no need to fret – Sajid Javid has highlighted that those living and working in the country pre-exit are protected by the EU Settlement Scheme, so any change in movement only comes into action for those looking to enter the UK post-exit.
Supply and demand
Probably the biggest worry for our industry is the flux in demand that may come from a reduction in EU citizens entering the country – many of whom currently rent. Reports suggest that 20 percent of privately rented property in the UK is occupied by non-national citizens, though it's not sure how many of those are EU nationals.
It's well known that there is an ongoing shortage of housing in the UK, combine this with high prices and many younger people locked out of restrictive mortgages and we can imagine more and more looking to rent in future years.
Younger audiences, in particular, are looking to be more flexible as they leave university or further education, as opposed to older generations – many go through several jobs in a short amount of time and often move across the country, in particular aiming for London and the career prospects it offers.
Buy to let
There's also the worry that the uncertainty surrounding Brexit will cause fewer investments in buy-to-let which, in turn, will mean less stock in the lettings market. It might even be that Brexit is not the main concern for those looking to expand or start a BTL portfolio, the government is continuing to tighten restrictions on those looking to invest with tax changes and the 3% stamp duty surcharge.
Despite all that sounding gloomy, many see Brexit leading to an increase in investment for those looking to enter BTL, given that there is more concern in the market from the fact that fewer people are looking to buy – it makes logical sense that there will be more renters in the market and therefore more demand for BTL. Good news for those who are looking to invest and of course, good news for our franchisees across the country who will hopefully see increasing portfolios.
We'll leave you with these final thoughts from our CEO, Dorian Gonsalves, on how he sees Brexit affecting The Belvoir Group in the coming months and years:
“Brexit isn’t having a material impact on the UK lettings sector as there are so many more factors that drive demand and supply and attitudes towards renting have changed dramatically in the last decade.
The vast majority of renters are happy with their accommodation and the best letting agencies support higher standards and a safer and more secure environment for their tenant clients. A better and safer private rented sector in the future, which all major stakeholders are working towards, will lead to even more people choosing to rent for longer. The number of people renting has more than doubled in the last 20 years.
Whether we’re part of the EU or not, individuals and families across the UK will always need to move house and with rents increasing at less than the rate of inflation, renting is cost effective and affordable in most areas.”