Impact of Brexit on EU Economy

A roundtable discussion of AIC managers was held to identify the impact of Brexit and assess the risk factors and the outlook in the property sector. Commercial mortgages include buildings, factories, healthcare, apartments, shops and retail sectors.

Such buildings require loans for redeveloping and refinancing commercial property where loans can be taken as business loans up to £25,000 without any security. However, if you require more than £25,000, you must have a security option and pay the administrative and legal costs.

One can get up to 70 to 75 per cent of the value of the property as a loan. The amount is also determined by the rental income the property can generate though goodwill property or stocks may get lesser amounts through Mortgage loans.

Commercial Property Yields

A closed-end company prefers investment in illiquid assets. For example, Canaccord Genuity research claims the average commercial property yield is around 5.3 per cent. Conversely, open-end funds can generate a yield of less than 3 per cent. 

Uncertainty related to Brexit has been responsible for delays in real estate transactions. However, most investors believe the returns on the property can be robust in the coming years.

Brexit Or No-Brexit – Impact on Properties

Experts believe the domestic market will remain consistent during the Brexit and post-Brexit phase, as there is strong pressure on the rents. Also, the growth in development cost, demand and supply factors support home prices.  

There is growing pressure on rents, and overseas investors are still looking for fast growth in various regional markets in the UK because even in the condition of volatility or dip in price, investors will get diversification through it.

2008 to 2018

The property markets were growing steadily after a phase of the recession. Nevertheless, with the announcement of Brexit, the markets paused in the last two years, and investment declined, leading to subdued UK housing market activities. Such uncertainties also involve people interested in selling the property to collect cash.

In the commercial property market, selecting the right property is the main factor, whereas, in some regions in the UK, the industrial sector, shopping centres are highly expensive. Also, the regional offices and retail warehouse market yield are attractive. 

Growth in any area will be influenced by inflation, long-term demand, supply, and long-term leases; it will reduce the impact of the downturn in property prices to prevent turmoil during the post-Brexit phase.

RICS Introduces New Policies to Support Property Sale Fast

Currently, the market is also facing the problem of the longest time taken to conclude a sale. RICS recently announced a hassle-free survey of the property to UK home buyers. A simple survey method with levels, where each level will explain the service, will replace the current system of three highly fragmented and confusing reports. 

It will involve simple language that the user can understand easily. Improved transparency, no contingency fees, no conflict, and clear advice are the key features of the new policy.

To know more about UK properties, click Hamilton International Estates.