Economic Uncertainty Likely to Continue to Impact Property Prices

Economic Uncertainty Likely to Continue to Impact Property Prices

Like many in business most landlords are worried about uncertainty.

Not knowing in which direction the country is heading can have a negative impact on investment and creativity.

The UK as a whole currently finds itself in an uncertain situation after the Brexit vote. And while the vote to leave the EU doesn’t appear to have triggered the disastrous consequences which were predicted by the experts, these are still early days.

Last week, Scotland took an even bigger step towards the unknown when First Minister Nicola Sturgeon announced that a draft bill to hold a second referendum on Scottish independence is to be published within the next 12 months.

It is not our place to judge the merits of Nicola Sturgeon’s policies.

However, there are certain issues affecting the property market raised by these policies and we feel it is only fair to mention them.

Prior to the previous referendum in Scotland, which took place almost exactly two years ago, the following assessment was published by SO SMART MONEY on their website.

In an article entitled “How the Scottish Referendum May Affect the Property Market” the writer stated: “There is always a slowdown within the property market whenever there is a general election whether it is for the UK government of Westminster or the current Scottish referendum.

“People like to hold back a little to see what may change before they make the big financial decision of buying a house.”

It is unlikely that the next referendum will take place within two years. This gives us a long period of uncertainty which is highly likely to impact negatively on property prices.

R&T Property Solutions are interested in extending our portfolio regardless of the political or economic circumstances. However, we understand that many other property owners do not share our outlook.

Consequently, we would be very interested to hear from anyone who feels troubled by the uncertainty which is expected following Nicola Sturgeon’s referendum announcement.

We specialise in purchasing properties which are the subject of regulated tenancies. We are delighted to conclude the deal very quickly and, if required, pay cash.

In some instances, because we provide impartial advice, we have paid a higher price than expected by the vendor.

In all instances the tenants have not been disrupted.

Although we are based in Glasgow we operate right across the country.

We’ve been in business for over 50 years and, let’s face it, you don’t last long in any business unless you offer a professional, friendly and fair service.

Looking forward to political change in Scotland, what might we expect if the voters in the next referendum decide to leave the UK?

And how will that decision impact on the property market?

In 2014, estate agents Savills commented: “As a new country with a small economy on the periphery of Europe, it is likely that Scotland would incur a higher credit risk, and therefore have a lower credit rating than the rest of the UK.

“This was highlighted in a HM Treasury report published last summer, which stated: ‘A key risk of independence is that the Scottish banking sector would likely be perceived as more vulnerable, resulting in higher funding costs which are then passed on to consumers’.

“Potential increased risk would probably mean an independent Scotland incurring higher mortgage rates, putting upward pressure on household finances and potentially driving down the value of housing, as buyers seek affordability.

“This might lead to the residential market stalling once again, with sellers unwilling to accept lower prices, just as they did during the recent economic downturn.”

SO SMART added: “If mortgage rates are increased those already on the property ladder or those looking to get on may look for more affordable housing to try and keep the costs of their monthly remortgage repayments lower.

“As buyers may start to seek better affordability, sellers may not be inclined to sell at a lower price.

“If sellers don’t sell lower this could stall the mortgage market or if sellers do sell lower, they may be forced into negative equity which could have a catastrophic effect on the property market.”

So independence is not likely to provide a win-win situation for landlords, if that prediction becomes reality.

The big question is: how likely is it that this assessment will come true?

No-one knows for sure. But if you are not willing to take the chance of your portfolio losing a chunk of its value then don’t delay, call us today.

Whether you own one flat in Glasgow, several houses in Edinburgh, or land in Lanarkshire, we want to hear from you.

We’ll give you the benefit of our knowledge and experience. You can rest assured you will get the best possible advice.

After all, we’ve been doing this type of thing for quite a long time now and we expect to be around for many more years to come.