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NO DEAL BREXIT EXPLAINED: What Could a no-deal Brexit Mean for The Cost of Rent?

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CHANCELLOR Philip Hammond will deliver the Budget on Monday and will be expected to outline how the government will protect the economy in the event of a no-deal Brexit. Here, we continue our special no-deal series, today looking at the cost of rent.

Yesterday, we looked at what could happen to house prices in the event of a no-deal Brexit. Today, we’ll turn our attention to renters.

According to a study carried out by the Resolution Foundation, the number of households privately rented by families jumped from less than one million in 2003 to almost two million in 2016.

In the same period, homes owned or bought by families decreased from almost five million to just over three million.

And in the 10 years up to April 2017, the proportion of people renting their home from a private landlord increased across all working age groups.

Rent is getting more expensive too.

According to data from residential property analysts Hometrack, the average cost of rent per calendar month increased by 19 percent from 2007 to 2017 for private rents in England and Wales.

With so many now renting, and the prospects of owning a home slipping further out of reach, a potential increase in rent could be a disheartening prospect.

One expert we spoke to had a mixed outlook on the prospects, and it’s not all doom and gloom.

Alexandra Morris, managing director of online letting agent MakeUrMove said: “With uncertainty about the rights of EU workers if the UK leaves without a deal, areas of the country where landlords provide accommodation to large EU migrant communities could be affected.

“If EU workers return home, there will be a host of empty houses and flats. Landlords will be hit financially if they can’t find new tenants to let the properties.

“This will have a knock-on effect on rental prices.

“In areas where there is then an oversupply of rental properties, landlords will be forced to reduce rents or sell.

“Overall, across the UK as a whole, a no-deal Brexit would likely only cause a marginal decline in rental prices and it would be relatively localised to these areas EU workers leave.”

No deal brexit explained: The rental market has increased across all age groups (Image: Getty)

So, if that’s the case, areas like London could actually see a decline in rental costs, while others could stay the same.

But there are other concerns.

As we’ve already seen during this series, there is enormous uncertainty around no-deal Brexit.

If inflation spikes, meaning the cost of basic goods increases but the currency value doesn’t, everyday items could become more expensive.

So if your rent stays the same, you could still be worse off financially.

However, as Ms Morris points out, this is not a new problem in the UK.

“The housing market is currently suffering from market failure,” she said.

“This is one of the biggest problems our economy faces.

“A major worry about the effect of a no-deal Brexit has to be that the Government is distracted by the task of negotiating our ongoing trading relationship in the transitionary period, taking their attention away from solving the problems we already have in the housing market.”

Courtesy: feedburner.com

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