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 Residential Lettings, 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, Benham & Reeves Lettings branches have fielded a multitude of enquiries from applicants 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 was from Europe. Since the referendum result was announced, the number of applicants from Europe has leapt up and now constitute 47% of all new enquiries. The number of new applicants 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, although there has been very strong European demand near international schools like the French Lycees in South Kensington and Kentish Town. 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 If the free movement of labour is withdrawn, then it is highly unlikely that Europeans already working in financial services will have any problems with work permits.
“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 potentially benefit the London lettings market.”