With the UK recently voting to leave the European Union having potentially enormous knock-on effects in a variety of sectors, one sector that appears likely to go unchanged after Britain leaves the EU is the rental market. This is according to research carried out before the result of the referendum which questioned letting agents regarding what they believed was in store for the UK rental sector in the event of the British people taking the advice of Nigel Farage and Boris Johnson and voting to leave the EU.
Despite the potential repercussions elsewhere, research by the Association of Residential Letting Agents (ARLA) revealed that its associate letting agent members are confident that the supply and demand of rental properties as well as the cost of renting for the average tenant will remain relatively unchanged after Brexit.
Brexit Impact Likely to be ‘Further Down the Line’
The Managing Director of ARLA, David Fox, said, “There is no avoiding the EU Referendum at the moment; and whatever the outcome, we are likely to feel the impact of the fallout of this debate in different ways. However, it’s important to put this into perspective and not get carried away in a zeitgeist. As outlined in our recent Brexit Report, the lettings market hosts a large number of non-UK born citizens and any change in migration policy is likely to have an impact down the line, especially in London. However, our monthly report clearly shows the sentiment amongst members is that the immediacy of this effect is likely to be minimal.”
Mr Cox also stated that he believed that it was the referendum itself that had caused a halt in policy progression, rather than the potential result. Mr Cox continued, “The EU referendum debate in many ways has stalled policy making and following the vote we need to move from political debate to action. We need supply to increase dramatically and quickly to really deal with the housing crisis as this is one of the most pressing problems facing UK society today.”
Majority of Letting Agents Confident of Maintaining Current Levels
ARLA’s research shows that 65% of their registered letting agent members believe that supply of rental property will remain unchanged after UK leaves the EU, with just 22% strongly believing that the supply will be diminished in the wake of Brexit, mostly due to international landlords withdrawing from the UK market. There are more ARLA agents who believe demand will also remain as high as it currently is, with 55% believing the ‘Leave’ vote will not have any affect. However, 31% do see demand decreasing significantly as the United Kingdom will become a much less attractive option for investors.
And while there is a majority that believe rental costs will not rise due to Britain leaving the EU, 19% of letting agents do believe that the British exit from Europe will indeed cause upward pressure on rental costs.