Since April 2018 the pound sterling has been in freefall and was officially marked as one of the most unstable and unpredictable instruments on the forex market. It looks like unless Theresa May can put together a deal that appeases the majority, the pound will continue to perform badly and align itself with some of the weaker and more volatile currencies. Unfortunately, due to the polarised opinions in her Cabinet, parliament itself and more widely the British public, it does not seem as though an agreeable deal will be reached.
GBP to USD exchange rate 2018 fallen from 1.42 to 1.28
Compliments of https://www.xe.com/currencycharts
Amongst this uncertainty, it could be a good time for investors to consider the UK property market. No solid negotiation looks to be made as Theresa May’s deal does not seem to appeal to most MPs in any party, due to the way in which the Irish border issue will be tackled and remaining part of the customs union and the continued role of the European Court of Justice – many aspects of the EU Brexiters wanted to leave behind. It looks increasingly likely that the UK will crash out of the EU with no deal. This means that there would be no transition period and the UK would revert to World Trade Organisation rules on trade which could see higher tariffs slapped on exports. The status of UK citizens in EU countries would be uncertain, as would the status of EU citizens in the UK. New trade deals would have to be brokered, but it is worth noting that these could take years – not days or months. The UK’s ties with the EU would be severed immediately and diplomatic relations will be severely bruised.
UK Property Sectors Set To Withstand Brexit Uncertainty
The UK is home to many prestigious universities, with 18 featuring in the top 100 of 2018’s QS World University Rankings and the University of Oxford and the University of Cambridge occupying the first and second spot on the table. It of is no surprise why studying in the UK is so appealing and why so many international students decide to apply. In fact, according to UCAS in 2018 there was a 2% rise in applications from students in the EU, and a 6% rise in applications from students outside of the EU. The dip in the number of national students applying to university was due to the lower number of 18-year-olds in the UK, not a depleted interest in further study. These students require accommodation, and as such it is in high demand which has caused a 2.9% headline rental growth in 2017. The appeal of UK universities and the rise in the number of international students makes for an ideal environment for a successful student property investment.
Other sectors that are isolated from the effects of Brexit include the retirement home investment sector, as the success of these investments is underpinned by Britain’s demographic changes rather than political. These homes are marketed towards the over 60s who wish to downsize to release equity or want the companionship, and therefore they generally do not have any underlying health issues. This means that the shortage in nursing staff that Brexit could cause will not have a profound effect on the sector.
With all this uncertainty ongoing, the pound is weak against other currencies which makes investing in the UK and its property market more accessible. Speak to UK property experts to find out more about these investment sectors that will remain buoyant despite Brexit. The looming threat that Britain will exit the EU without a deal is concerning to the mainstream housing market, but there are still ways to make money from property investment, and whilst the pound is weak now is the best time to act.
One Touch Property Investment is a property investment company that successfully traded through the 2008 property crash. Join thousands of other investors and Speak to one of our great property investment experts about your concerns or if you wish to discuss your property investment strategy.
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a MA degree in Nordic Studies from Sofia University and has also attended the University of Iceland. While she covers a variety of investment news, she is particularly interested in developments in the field of renewable energy.