UK property investors fear Brexit will push away overseas buyers
Uncertainty has already slowed house price growth, with luxury London market hit hardest
A majority of British property investors are worried Brexit will deter overseas buyers and further weaken the UK housing market, a survey has found.
As economic uncertainty over Brexit continues to bite, 55 per cent of UK residential property investors said they believed Brexit would weaken the market by making the UK less attractive to foreign investment.
A similar majority said they believed international interest was important to the economy and over 80 per cent of investors said they believed overseas buyers play a vital role in making the UK housing market competitive.
Yet despite the high importance placed on international investment, local investors indicated that they would like to see some reforms to the system, with two-thirds saying they would like to see an increase in stamp duty (a UK property tax) paid by overseas buyers.
The UK government is currently considering a 1 per cent surcharge on property purchases by foreign buyers.
Alpa Bhakta, CEO of Butterfield Mortgages, said: “As the UK heads towards the Brexit deadline, the country’s ability to attract international investment is going to be hugely important.
“Property investors are concerned that we may, in fact, be pushing away overseas buyers and in turn damaging our own real estate market," Ms Bhakta added. “That said, it is clear that controls must be put in place to protect the interests of domestic buyers.”
The UK housing market has endured a period of turbulence since the country voted to leave the European Union in 2016.
Increasing uncertainty over the terms and timing of Britain's withdrawal from the bloc has weakened the pound and destabilised the property sector.
The British lender Halifax said on Monday that house price growth had slowed to its lowest level in more than six years.
The average price of a house fell 0.4 per cent month-on-month to £232,574 (Dh1.04 million) in September, and edged up by just 1.1 per cent year-on-year.
Russell Galley, managing director at Halifax, said house price growth levels were the lowest seen since April 2013.
Property values in London have been the hardest hit as the country grapples with uncertainty over the possibility that the UK could crash out of the EU without a deal.
According to a report by Swiss investment bank UBS, the UK capital remains “trapped in uncertainty,” with prices at the top end of the luxury market being worst affected. However, it added that the weakened pound may make UK property purchases more attractive to foreign buyers.
The UK government on Tuesday signalled that talks over a final Brexit deal, made to Europe by prime minister Boris Johnson, were about to collapse.
The government’s pledge to take the UK out of the EU “come what may” appears likely to contribute towards increased economic uncertainty in the near term.
“Looking ahead, we expect activity levels and price growth to remain subdued while the current period of economic uncertainty persists,” said Mr Galley.
Updated: October 8, 2019 06:00 PM