Brexit Briefing: The Impact

on the Rental Market

The Impact on the Rental Market
The Impact on the Rental Market

28 July 2016, by Lucian Cook

How the Brexit vote will change supply and demand in the mainstream and prime rental markets

Summary

■ In the mainstream market, we expect uncertainty following the Brexit vote will impact buyers’ willingness to commit to a purchase, potentially resulting in a fall in transaction numbers and acting as a drag on house price growth. As a result, we expect to see demand pushed into the private rented sector.

 

■ If, in the economic uncertainty following Brexit, mortgage lenders tighten their criteria on loan to value and loan to income ratios, people will find it harder to access the market, keeping them in the private rented sector for longer.

■ On the supply side, we believe a less hospitable tax environment is likely to curtail investment buying activity. However, this will probably be offset by a rise in accidental landlords in the short term. Despite an imbalance between supply and demand, rental growth may be held back by wage growth.

■ In the prime market, high levels of new supply have limited rental growth, particularly in London. The market is more exposed to uncertainty regarding the prospects for the financial and business services sector.

■ That means landlords will need to remain competitive on asking rent and flexible on terms, as well as ensuring the property is presented in good condition.

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The Impact on the Rental Market

Taxation, economic prospects and interaction with the sales market will be key drivers

 
 

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Key contacts

Lucian Cook

Lucian Cook

Director
Residential Research

Savills Margaret Street

+44 (0) 20 7016 3837

 

Katy Warrick

Katy Warrick

Director
Residential Research

Savills Margaret Street

+44 (0) 207 016 3884

 

Jacqui Daly

Jacqui Daly

Director
Residential Research

Savills Margaret Street

+44 (0) 20 7016 3779

 

Kirsty Bennison

Kirsty Bennison

Associate
Residential Research

Savills Margaret Street

+44 (0) 207 016 3836

 

Frances Clacy

Frances Clacy

Associate
Residential Research

Savills Margaret Street

+44 (0) 20 7409 5905

 

Gaby Day

Gaby Day

Research Analyst
Residential Research

Savills Margaret Street

+44 (0) 207 299 3003