EU referendum: A Brexit doesn’t necessarily spell doom and gloom for London’s property market – fortune will favour the brave
While a vote to leave the EU on 23 June looks less likely by the day, landlords, letting agents and corporate relocation specialists shouldn’t worry too much about a Brexit.
Whether we wake up on the 24 June ‘in’ or ‘out’ of Europe, it will be several months before the true consequences of either outcome become clear.
Far from being a disaster for landlords, a vote to leave the EU could actually boost the lettings market – at least in the short-term – as employees of multi-national companies adopt a “wait and see” approach rather than commit to buying a home while the inevitable political and financial horse-trading ensues.
Many have argued that a Brexit decision would be disastrous for the City and Docklands, and that a possible exodus of multi-national companies’ headquarters and their employees would almost immediately ensue, but realistically this is almost certainly not going to happen, not least because of the huge costs involved.
HSBC, for example, has already committed to retaining its global HQ in London, at least in the medium-term, irrespective of the outcome of the EU referendum.
The hyperbole on both sides of the referendum debate seems to ratchet up by the day, with some of the latest pronouncements bordering on the hysterical.
Of course the more outlandish and apocalyptic the claims, the less credibility they have. Rather than bringing about the end of the world as we know it, a Brexit would most likely result in yet more corporate fence-sitting and, under those circumstances, we would expect international businesses and the people they employ to maintain a “holding pattern” until clarity emerges.
In theory at least, this would boost rental demand, as employees aren’t likely to buy a home in London if there’s a chance they may have to relocate at some point in the near future.
Tenants in this position would more likely to just carry on renting, while the demand for short-term accommodation and corporate ‘short lets’ – which has been booming of late – may actually rise as staff moving to the UK to take up a role are likely to be posted on shorter fixed terms, at least until the dust settles.
Landlords, especially those operating in markets that are particularly dependent on sustained demand from employees of large multinational corporations – areas such as Canary Wharf, Docklands, City fringes, the Southbank between London and Tower Bridge, Bermondsey and Greenwich, for instance – need to be well attuned to this opportunity, and would be well advised to act decisively to seal a tenancy agreement wherever they have a reasonable offer on the table.
As always when it comes to getting ahead in London property, fortune favours the brave.