Brexit – three things every investor should do now!

2016 may well go down as the year when political decisions have had the most influence on the ups and downs of the property market.

First, we had the introduction of the 3% additional stamp duty charged on anyone buying a second home. That was primarily aimed at buy to let investors and the Council of Mortgage Lenders states: “the distortion caused by this stamp duty change appears to be larger than for any previous stamp duty change we’ve seen.”

And now we have the effect of the Brexit vote, which has already had an impact on sterling, (down at the time of writing this article by over 10% against the euro and dollar), is showing signs of affecting our economic performance, (with FTSE 250, bank and builders shares down) and may well end up contributing to dampening house price inflation too.

However, for property investors - especially those investing in buy to let over a 15 to 20-year period - rises and falls in the market are often when the most money can be made. On the flip side, it’s also when the most money can be lost, so here are three things that are worth doing over the coming months to help ensure your existing buy to let and any new purchases deliver on your investment returns.


Job #1: Monitor prices and rents in your local market

Although we try and deliver the latest news on property prices on a regular basis, since the credit crunch they’ve become very specific to the precise property type, street and area they’re in. So it’s essential you keep an eye on properties going up for sale, check what they sold for afterwards and also note how quickly they were snapped up. Whatever happens in the future in order to stay up to date it’s important to see what the localised impact of Brexit.

Keep an eye on rents as well. Although for properties where demand is higher than supply, rents will often increase, they tend to be capped by wage rises. But if more people are likely to continue renting until things become a little more certain and they’re sure it’s safe to buy, demand for rental accommodation is likely to continue to rise accordingly. And with the increased costs of complying with lettings rules and regulations and taxes, if you can increase rents to help maintain your income levels, then it’s worth considering.


Job #2: Check your finances

With so many changes within the economy - in particular falls in bank shares and talks of the base interest rate being reduced, coupled with lenders being asked to check their buy to let criteria is robust enough to cope with a market downturn - now is definitely the time to review your mortgage finance, buy to let costs and current and future tax liabilities.

Re-financing when your property is worth as much as possible can help you access lower mortgage rates. If you can secure a fixed rate, that could help you know what your portfolio will deliver in the future and also, depending on the terms and conditions, insulate you against potential rises in interest rates if our economy does not stay quite as strong as it is currently.


Job #3: Keep an eye out for a bargain

Some good news! When buyers’ confidence is dented, as it appears to be currently, it can be a great time for professional investors to pick up a bargain property for 5-10% or more below its true value. Look for new build sites that only have one or two properties left that they need to sell, or buy from a seller who has a deadline and getting rid of their property is more important to them than getting the asking price. If you can pick up a property at a discount, not only have you got good value for money, but it also means your yield and returns are likely to get a boost. 

This information has been provided by our partner Mortgage Advice Bureau. For more information relating to Mortgages or for Mortgage Advice please visit Mortgage Advice Bureau.