The decision of the United Kingdom to leave the European Union, commonly known as Brexit, has brought about many changes and uncertainties in various sectors, including the real estate market. One of the questions that have been on the minds of landlords and property owners is whether tenant demand will change after Brexit. In this blog, we will explore this question in detail.
1. Brexit Turmoil in the Property Market
Brexit has been causing turmoil in the UK’s property market due to the uncertainty surrounding what will happen next. According to The Royal Institution of Chartered Surveyors (RICS), the demand for retail property in the South East took a huge downturn in August in the lead up to Brexit.
2. The Brexit Effect on Businesses
Brexit is making it difficult for businesses to make key decisions in their operations. The uncertainty has led to decreased demand for retail spaces, with 64% of the South East’s commercial property agents report. Businesses, especially in the automotive and retail sectors, are feeling the impact of Brexit on their profitability and decision-making processes.
3. EU Nationals and Tenant Demand
One of the key factors influencing tenant demand after Brexit is the status of EU nationals living in the UK. According to the Office for National Statistics, there were an estimated 3.7 million EU nationals living in the UK in 2020, accounting for around 5.6% of the total population. Many of these individuals are renters, and their housing needs and preferences could be affected by Brexit.
4. Impact on Commercial Property
While industrial and office buildings seem stable, the retail sector is lagging behind due to Brexit uncertainty. As a result, prime and secondary retail rents are expected to fall by 3.3% and 4.5% respectively over the next 12 months, providing opportunities for independent retailers to acquire better spaces affordably. Acquisition agents can capitalise on this changing marketplace to help independent retailers improve their locations while rents are low.
5. Impact on the Rental Market
Brexit could also have wider implications for the rental market in the UK. For example, if there is a decrease in tenant demand, this could lead to a slowdown in the construction of new rental properties, which could exacerbate the existing shortage of affordable housing in the UK. On the other hand, if there is an increase in tenant demand, this could lead to increased competition for rental properties, which could push up rents. Brexit could also have an impact on the regulatory environment for landlords and tenants. For example, the UK government has indicated that it intends to introduce a new points-based immigration system, which could make it more difficult for EU nationals to rent properties in the UK. This could lead to increased demand for rental properties from UK nationals, which could in turn push up rents.
It's difficult to predict exactly how Brexit will affect tenant demand in the UK rental market. However, it's clear that there are a number of factors that could influence tenant demand, including the status of EU nationals living in the UK, changes to the regulatory environment, and wider economic factors. As a result, landlords and property investors will need to keep a close eye on developments in the rental market and be prepared to adapt to any changes.
Explore and read our other blogs
Will Renovating Your Kitchen Add Value to Your Property?
Property management- outsource or do it yourself
