Let’s start by going back to March this year, when buy-to-let and second home buyers were rushing to make property purchases before the Stamp Duty hike.
House prices increased 5.7% according to the Nationwide House Price Index – the highest rate in a year – and mortgage lending surged to pre-financial crisis levels.
Across the Platinum Property Partners network alone, four times as many properties were purchased compared to the same time last year.
Despite imminent tax changes on the horizon for individual landlords, confidence in the buy-to-let sector remained buoyant.
So why should something as trivial as Brexit put investors off?
As with any change, it’s perfectly normal for people to feel uncertain and confused about what lies ahead. This is no different in the property market.
Such uncertainty has reportedly already led to less properties for sale and fewer numbers of people looking to buy. Many first-time-buyers and homeowners have put move plans on hold and some landlords are taking the ‘wait and see’ approach. This will ultimately lead to a slowdown in house price rises and even a fall in the short-term.
But actually, this does present some excellent buying opportunities for investors, or even owner-occupiers. And here’s why.
Firstly, many vendors will find themselves in situations where they have to sell. Perhaps they’ve already completed on a property they are buying. Maybe they’ve inherited a property that they need to sell or are planning on emigrating. In some unfortunate circumstances, couples could be going through a divorce.
This could result in them lowering their price to entice the smaller amount of buyers out there and achieve a quick sale.
Similarly, if you’ve only recently gone sale-agreed, then there could be an opportunity to negotiate on price. I’m not condoning the unethical strategy of waiting until the last minute and threatening to pull out of the sale if they don’t give you a hefty discount – that’s just bad practice and plain wrong.
However, your vendor could also be looking at a lower price on their forward purchase. And much like a surveyor finding that the foundations are shifting, Brexit presents a material change and justifiable reason for negotiating.
Already, one of our Platinum Property Partners has managed to negotiate an £8,000 price reduction on a property they had already gone sale-agreed on pre-Brexit. This just goes to show that it is a strategy that can work where it is genuine and could benefit everyone in the forward chain.
Secondly, as less confident buyers sit back and wait, there will be less competition for the properties available on the market.
Only a few months ago, many properties were being sold for more than the asking price as demand far outstripped supply. With pre-Brexit buyers sitting on their hands, there is a higher chance your offer will be accepted.
As the famous saying goes, ‘observe the masses and do the opposite.’
So if you were thinking about buying before Brexit and wondering if you should continue with your plans, then the answer is yes. If you have the capital and a robust strategy, then there is never a bad time to buy, and now is one of the best times.
And our advice is, if you’ve already gone sale-agreed but are getting cold feet, then try negotiating on the price if the circumstances allow. Try not to pull out of a purchase unless you absolutely have to.