How can Brexit be a property investor’s opportunity?

Brexit! Whether you’re a Brexiteer or a Remainer, no one can deny that this is probably the number one issue on the minds of UK citizens and residents alike. The one question that everyone is concerned about, but no one seems to have an answer to; how will it work for us?

Ever since the UK government invoked Article 50, uncertainty and anxiety over Brexit’s impact on the UK economy has continued to rise; no more so than in the property industry.

In order to appreciate the full breadth of Brexit’s impact on the property industry, you must first understand how demand in this industry works. The health of any property market is largely based on buyer feelings and opinions, rather than solid physical, or financial factors.

If buyers get anxious, then property prices fall, even if both the physical properties and investment income that they provide remain the same. This is what leads to booms and dips in the market and is largely the reason behind the depressed UK house prices we’ve seen over the past year.

However, for the savvy property investor, this phenomenon creates the perfect investment opportunity.

Over the past year, around £1.6 billion of value has been erased from the UK property market, as many property buyers, sellers and investors adopt a ‘wait-and-see’ approach to their property transactions.

This has caused a reduction in both average house prices and total amount of properties available on the market. These factors have in-part contributed to the housing crisis that the UK finds itself in, with too many people and not enough available housing.

In fact, according to the housing charity Shelter, 1.2 million additional homes must be created just to keep up with demand. Add this to the fact that the millennial generation has become the largest rental generation to-date (63% of 25-34 year olds) and that UK rents have continued to increase year on year, and we start to see that the UK buy-to-let housing market does indeed have massive growth ahead of it.

That being said, realising the full potential of a volatile and depressed housing market does require smart investment strategies.

To make the most out of your buy-to-let property portfolio, here are three key guidelines:

1. Buy low

This is where Brexit anxiety becomes your friend. Use the current volatility of the UK property market to low ball property sellers and get the most for your money.

This is very much a buyer’s market, so you should aim for a purchase price up to 10% below market value. You must remember to do your own research beforehand. Being informed gives you more leverage in price negotiations, ensuring that you receive the best price you possibly can.

2. Add rental value through extensions

Look for properties that have opportunities for additional rooms to be added. If you have a large kitchen and living room, move the kitchen to the living room with an open-plan concept and convert the kitchen to another bedroom.

Attics, basements, garages and pool houses can also be converted to additional bedrooms, raising your monthly rental income.

If you choose this strategy, you must ensure that you speak with your contractor before the purchase, so you can budget correctly and avoid running out of money before the job is completed.

3. Don’t cut corners

Many property investors make the mistake of seeing corner-cutting as an easy way to reduce monthly costs. After all, it’s not like you’re living there!

However, as many landlords will attest, tenants tend to treat properties with the same level of care and respect that their landlords do.

If you show that you’re not invested in maintaining your own property, then your tenants won’t be either and as homes don’t fix themselves, this will undoubtedly lead to the need for more expensive repairs down the road.

Making property profits during the Brexit process requires forward planning, business acumen and most importantly, a sturdy constitution, as many around you will view your investment as too risky.

However, depressed house prices, rising rents and a massive increase of future renters all indicate that the future of the UK buy-to-let industry is bright.

*Michelle Niziol is CEO of IMS Property Group and Michelle Niziol Bespoke Property Investment