Sim Sekhon on Brexit: Let’s not let uncertainty get us down

These are challenging times to be in business. Six months until Brexit and any clarity we hoped to have at this stage remains elusive. There are some people predicting calamity and others brimming with optimism about our bold new independent future. But what’s become increasingly clear is that the uncertainty has started to have effects on the property rental sector.  That’s understandable, but it’s also a pity because there may be no negative consequences of Brexit for the industry.

Human evolution has ensured the survival of a species that’s particularly good at spotting and avoiding potential threats. You’ll see this demonstrated over and over again in our obsession with bad news, and we seem particularly fond of bad news if it relates to Brexit. If only we were as focused on the positives and the opportunities.

But we are where we are, and the uncertainty has become an issue for landlords who, through bodies like the Residential Landlords Association, are begging the Government for some concrete facts on which to base their decisions. They’re highlighting the status of EU nationals currently residing in the UK whose tenancy is due for renewal. Unless they are eligible to apply for settled status, they may not be able to remain in the country. Right to Rent checks have already put landlords into the sticky position of policing immigration, but now the issue seems so much bigger.

EU citizens resident in the UK at the Brexit date do have rights but there are several clauses and conditions. These are really quite straightforward, but landlords aren’t immigration lawyers and tend to err on the side of caution and there are now signs that they are avoiding agreeing tenancies with EU nationals.

The numbers of EU nationals wanting to rent has fallen. That’s not unexpected given our decision to leave the EU, but it’s something that landlords right across the country need to be aware of, because of EU nationals currently living in the UK, two-thirds are in rented accommodation.  However you look at it, the tenant demographic is changing, but throughout history, this has been the case. When we see figures that show rent increases in the regions outstripping those in the capital, it’s too easy to jump to the conclusion that the uncertainty over Brexit is the cause.

Consider the value of sterling. Various factors cause it to fluctuate, but it’s spent much of this year losing value compared to the Euro. A slump in our currency causes inflation, and could, in turn, lead to interest rate rises. Pick up one paper and this is seen as inevitable and any landlord who finances a portfolio with a mortgage is going to be feeling the impact sooner or later. Pick up another paper and a sound case is argued for the exact opposite.

If Brexit affects our economy – and, of course, it already has – it will affect the housing market. A serious slowdown could have major repercussions for some in the sector, with reduced demand, reduced rental income, reduced capital asset values and increased costs. Equally, it could lead to a booming economy, a more flexible workforce and more rental demand. In future, freed from EU restrictions on buy-to-let lending, it may easier to borrow, and our corporation tax rates are likely to fall over the next couple of years.

I’m not foreseeing an imminent crisis. In fact, I believe that there is more than enough demand for housing in the UK to ensure a healthy rental sector for a long time to come. But like others who have invested their time, energy and money to make a success of the property rental business, I want clarity when I’m making decisions, and since 23 June 2016, we’ve had precious little of it

These next few months won’t be the end of things. The full impact of leaving the EU, whether it’s good for the UK or not, will take years to be felt. But gradually, we will move to a position where we know what’s happening and can respond accordingly. In the meantime, I believe landlords should keep their eyes on the negotiations, follow updates from their trade bodies, and continue campaigning for their concerns to be addressed and their voices to be heard amidst the ongoing Brexit commotion.

And there’s one more thing I believe with a passion: we need to keep things in perspective. We need to avoid the spin and look for balance in the news. We may have questions right now, but property rental is about the longer term and for this sector, Brexit could present as many opportunities as it does challenges.