7 Things You Need to Know About The Brexit Effect for House Buyers
If you’ve been trying to purchase a house as a homeowner (or as a landlord) in the last few years, you might have noticed something strange going on with the market. This is what has been dubbed ‘the Brexit effect’. The uncertainty of Brexit and the will-we/won’t-we merry-go-round has many claiming it’s having a profound effect on our economy, and none more so than the housing market.
But just because our politicians can’t make a decision, doesn’t mean our lives have to be put on hiatus too. And with the upcoming general election and every political party taking a different stance on Brexit, it’s becoming pretty impossible to even hazard a guess what the potential effect on property prices and the property sector as a whole could be, throughout 2020.
What we do know is that people are always going to need somewhere to live, so if that’s you and you’re in the market for buying a house, here’s what you need to know about the Brexit effect for house buyers.
Brexit effect for house buyers
1. Don’t delay purchasing (if you’re certain).
If you’ve found the house of your dreams, don’t delay in putting in an offer. Now is the perfect time for buyers, in fact, this truly is a buyer’s market – you could secure yourself the house of your dreams at the price of your dreams.
2. Lock in a low interest mortgage.
No one knows what the future entails, but for now, with interest rates incredibly low, make sure you secure a great mortgage deal. Because if Brexit does have the catastrophic impact that some are predicting, it won’t be good news for the economy, which in turn could see interest rates rise.
But if you’re locked into a low interest, fixed term mortgage, you can weather the storm (for the length of your fixed term), whatever it looks like.
3. Consider buying old property stock.
If you have your heart set on purchasing a new build home, don’t forget to factor in the new build premium, which, if house prices plummet after Brexit, could see you end up in negative equity. And if you need to sell your home again in the future, until house prices pick back up, you could lose money.
So if you want to err on the side of caution, opt for older housing stock, at a reduced rate, and don’t risk losing money unnecessarily.
4. Don’t make an impulse decision.
This advice applies to Brexit or no Brexit.
House buying is one of the most expensive purchases you will make during your life, so never rush into it. Especially now when you might be tempted to purchase a ‘steal’, to get your foot on the property ladder.
If you’re buying a house, buy one with the aim to live in it as long as possible, moving house is expensive enough as it is – solicitors fees, stamp duty, removal people, it soon adds up.
So don’t put your money down on anything unless you see it as your forever (or at least the next few years) home. You could find yourself stuck with something that doesn’t actually suit your needs, that you don’t really like.
5. Buy in London and the South East.
If you’re looking to buy a house in London or in the South East, now is the time to buy. House prices in London and the South East have dropped the most since the vote for Brexit. So if living in the capital was too expensive before, now might be affordable.
In parts of the capital prices have dropped up to 7% in some luxury areas since 2016, with some experts predicting a further drop of up to 20% in the event of a no deal Brexit (but that isn’t guaranteed).
Plus, with the slow down in the market, London properties have been getting progressively harder to shift, so you might be able to put in a very cheeky low offer, or find something in an area that was previously out of your price range.
6. It might all be a red herring.
One thing that might be of note to house buyers, is that whilst all this speculation is being thrown around about the Brexit effect on the property market, one theory that won’t go away about the gradual slow down in the housing market is that Brexit is just a red herring.
Some critics have argued that house price slow down is in fact due to a much needed market correction. And if that is the case, and you’re a first time buyer, now is the time for you to get in on the action, because you might not have it so good again.
The general consensus if you’re thinking about buying property right now is don’t leave it too long. No one knows what the future holds, but if you’re looking to grab a bargain, the time is right. Just remember, don’t make an impulse decision and don’t purchase anything you can’t imagine living in yourself – you might end up stuck with it for longer than you thought.
For any advice on saving for a deposit, or tax advice with regards to purchasing a property, don’t hesitate to get in touch. 3 Wise Bears are a small, dynamic accountancy practice with an experienced team, ready to help with advice on all things accounting and tax-related.