What could Brexit mean for overseas investors in British property?

Unlike certain European countries, the UK has not historically placed any restrictions on non-EU overseas investors buying property in the UK.

That means that there should be no direct chilling effect on the UK property market due to overseas investors worrying about being frozen out by the UK’s exit.

In fact, the Brexit referendum (and not the actual Brexit) might usher in a boom of overseas investment in the volatile London property market. Ever since the referendum was declared, experts expected the relative value of the pound to drop if an exit vote was the result. Of course, that actually did happen. It even seems to be cooling off the southern property markets, at least at the high end, as investors start getting cold feet about that bubble popping in the near future.

However, the future may not be exclusively bleak in the London property market. Anna White, Head of Property at the Telegraph, predicted that the fall in the pound would cause UK property to become more attractive to overseas investors. As their relative buying power goes up and prices in London fall, we could see a massive influx of money which could prop those markets back up, at least long enough for the pound to rebound (assuming it does, which is still an open question).

Will this help the Brexit Bounce?


Possibly. Many experts cite the slowing of investment in the months leading up to the vote as evidence that, once the market stabilises, the investment will resume. If that is the case, this extra injection of capital could act to increase investor confidence, and bring about a restoration of the market.

On the other hand, it will be at least 2 years and likely more before the Brexit becomes a reality. The likelihood of regaining full confidence before that is accomplished seems unlikely.

Greater offshore influence after Brexit?


Of course, the irony of the situation is that many of the ‘leave’ camp voted the way they did to limit foreign influence in not just the UK’s law and politics but its economy. If leaving the UK really does tilt the property owner demographic in the south further towards overseas investors, it could result in more foreign influence on the UK economy, rather than less.

So, is this really a good time for overseas investors to enter the UK property market?


That all depends on what you think the market is going to do in the medium and long term. Expert opinions are mixed, so you have to make your own predictions.

If the market continues to be depressed during the entire Brexit process and beyond, prices may drop even farther. If that is the case, this will have turned out to be a bad time to enter the market.

If the UK property market (or even just the London market) rebounds over the course of the next few years, or even if property values hold steady while the value of the pound improves, this will have turned out to be a good time to enter the UK property market.

In the end, you have to decide what you personally think will happen. 

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