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Should I buy before Brexit?

  1. 15 January 2019
  2. By Andi Michael

It's the question everyone’s asking. You’re ready to buy, you’ve got your deposit and you’re eager to move - but should you wait until you know what’s going on with Brexit?

Article updated September 2019

No one can predict the future, and that’s exactly the reason we’ve avoided trying to give advice like this on the site. However, with the news that 55% of first time buyers ready with a deposit are waiting until after Brexit, we felt like it was time to share a little of our knowledge.

Brexit is an unknown, and it is making both buyers and sellers a little edgy. Will prices drop? Will properties increase in value? Will we find that we could have gotten a better deal?

We originally posted these answers in January 2019, but almost a year on and not a huge amount of clarity has been offered with regards to plans post-Brexit. However, with KPMG releasing news that property prices might drop in the case of a ‘no deal’ Brexit, and a ‘no deal’ looking more and more likely, we thought it was time to revisit some of these questions.

Here are some of the top Brexit property concerns, and our responses:

Is now a good time to buy?

As always, depending on what region you want to buy in, you may find a few good deals at the moment.

For many places around the UK, it is most definitely a buyer’s market. For sellers concerned about price drops in the case of a ‘no deal’, they might be much more likely to take a lower offer now, in case prices drop further than expected after October 31st.
As with most industries, the property market doesn’t like uncertainty, and so everyone’s hesitating. Buyers aren’t sure whether to take the plunge now, or wait it out in the hope of a better deal in November.
We’d say that if you’ve found your dream property, you need to weigh up whether losing it after 31st because the seller doesn’t feel able to sell it at such a low price, or is left with negative equity, would be worth the risk.

Will it be cheaper later?

It’s hard to tell whether property prices will go up or down. Mark Carney sent people’s minds racing last year when he suggested a 30% drop in prices, but this was simply a test the Bank of England were doing in order to remain rigorous.
KPMG today suggested a ‘no deal’ Brexit would cause price drops in certain areas of the UK. These mainly focused on London and Northern Ireland.

Stamp Duty

Frustratingly, after a couple of mentions of Stamp Duty reform from more senior MPs, some people are convinced that Stamp Duty will be shifted to the seller under our new prime minister. There has been no comment on this, with Sajid Javid saying he was misquoted and only said that Stamp Duty does need to be improved.
Some buyers may be waiting for the Autumn Budget to confirm or deny any changes to Stamp Duty, but we have no concrete evidence that there will be any change, especially with the focus on the approaching Brexit deadline.

Mortgage deals

Mortgage deals have become more competitive for 95% mortgages and first time buyers. There’s also been the recent softening on limits for first time buyers, with talk of 100% mortgages making a come back, and the extension of the 4.5 times your income being extended for those in certain careers.

Mortgage terms have also been lengthening, with 30 year and even 35 year mortgages available, making monthly repayments more affordable for first time buyers. Recently longer term mortgages have become available for those with Help to Buy Equity Loans, meaning they can have longer to pay off their mortgage and their monthly payments may decrease.
Choosing a mortgage with a great deal that will tie in your repayments for a few years may give you some breathing space and a chance to plan your next move. If there are excellent mortgage options available to you, offering some security, it might mean it’s the right time to buy for you.

Negative equity

Negative equity is when you’ve paid more for your property than it is worth – this could be one of the main fears of potential buyers during the run up to Brexit. What if you buy a property with a mortgage, and then find yourself stuck paying it back and unable to sell it because it has decreased in value?

Negative equity is really only an issue if you intend to sell your property soon after you buy it. If you are buying a property as a home rather than an immediate investment, you are likely to move out of negative equity as the market recovers. Whilst it can be upsetting to think you have overpaid for your property, it is a long term process and the market is often cyclical.

If you are planning on staying in your home for more than five years, you don’t really need to focus too much on negative equity, especially if you’ve found a property and a price you’re happy with. If you’re planning on buying and selling soon after, then perhaps now is not the time to buy in case you get stuck with a property you can only sell at a loss.

Why not now?

It’s completely fair to be concerned, as so much of the news about Brexit is confusing and contradictory. However, at the moment it is all speculation. If you’re waiting on buying your dream home because you think you might get a better deal, you may lose out further down the line.

At the moment, with so many properties on the market getting little attention, you really do have the chance at getting a bargain. Whilst everyone else is holding out, you can make the most of the indecision.

As the Brexit deadline has been kicked down the road so many times now, understandably buyers and sellers are getting frustrated at waiting for more clarity. If you need to move and have found the right property for you, consider the risks of waiting longer and if you’ll regret missing out the property after the deadline.

Remember that regardless of what’s happening in the property industry, a property is only worth what someone is willing to pay for it.


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