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The true cost of Brexit on the property market—not felt?

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Experts say the colossal impact of a no-deal Brexit will be on house prices and not the property market at large

The counting of days for the Brexit transition period has begun—posing  questions on various aspects of the UK economy. The popular question raised is what will be the pulsating effect of Brexit or a no-deal Brexit on the property market?  

To begin, house prices in the UK have been stable and buoyant for the most part. With a no-deal Brexit on the cards, experts anticipate that the UK leaving the EU without a trade deal could impact house prices in London—but not the property market at large. For what it’s worth, the UK property market is experiencing a boom driven by the government’s decision to impose a stamp duty holiday until March 31, 2021. 

London Lettings and estate agent Benham and Reeves has published a research report which found that cash buyers are securing the biggest property price discounts in the prime London market. This finding is compared to those funding their home purchase with a mortgage. 

Why London property market is still attractive 

Across London’s prime postcodes, cash buyers are easily saving themselves  shy of £16,000 on average. Again, this is quite profitable compared to those buyers who are funding their home purchases with a mortgage. Recently, the biggest cash discount seen across the prime market was in the W1 postcode in Mayfair. According to the research, these cash buyers are paying an average of £2.320 for property in the postcode, which points to £81,772 less less than their mortgage funded counterparts. 

Director of Benham and Reeves Marc von Grundherr, as part of the research said, “Cash is always king when it comes to negotiating a better price in the UK property market and this is no different at the very top end. Regardless of the value of a property, a cash buyer often means a smoother, quicker and more stable selling process as there is no chain beyond them to complicate the transaction. This can be preferable for many sellers but it does often mean adjusting their price expectations for the pleasure. As a result, cash buyers will often pay less and in the prime market, these discounts can be sizable although still relative to the overall price of a property.”

For now, the London property market is still an attractive market for property buyers despite all crises. A weaker pound and added benefit of a stamp duty discount is in fact allowing foreign cash buyers to save more money and secure a good value for their investment.

Grundherr said “We see many foreign buyers, in particular, benefit from a cash funded purchase as they generally tend to have a strong financial position and are entering the market fresh with no previous purchase slowing them up. The London market currently provides a very attractive proposition, with a weaker pound and the additional benefit of a stamp duty discount meaning foreign cash buyers are saving themselves quite a considerable sum and are securing extremely good value for money.” 

UK cities noted for chain-free sale 

In another research published by Yes Hombuyers, some of the UK cities are noted for their highest levels of chain-free property stock, especially for homebuyers seeking to avoid current market backlogs. By the numbers, Cambridge appears to be the chain-free property hotspot in the UK. Currently, 46 percent of all homes listed in London create an opportunity for a chain-free sale., leading to easy transactions and swift sale process. That is followed by Belfast, which is again home to the second highest number of homes with chain-free sale. It is found that 44 percent of properties listed for sale have not had a dreaded chain. 

Other cities such as Sheffield, Manchester and Liverpool share the reputation of being the third best city for a chain-free sale. Two weeks ago, it was found that they collectively owned 42 percent of the current property stock listed. In this context, Matthew Cooper, Founder and Managing Director of Yes Homebuyers, as part of the research said “Being stuck in a chain can be an incredibly stressful process when selling or buying a property and waiting for the stars to align can drag on for months on end, before the whole thing comes crashing down and your back to square one.” Nonetheless, the beginning of 2021 will lead to the realisation of what might be the actual impact of Brexit on the UK property market, and whether the prices and chain-free sale will dramatically change.

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