Brexit has hit global economy on a great level. It has completely changed the way stock market worked. The impact has also affected many big corporations and reduced their sales on a large scale. When it comes to European countries and United Kingdom, the effect of Brexit is highest. According to economists and policy makers, the impact is going to remain there for the next 15 to 20 years. A lot of small and medium business industries have relocated to the other side to carry their operations and sales.
Brexit has also affected mortgage market in a severe manner. The buying and selling of real estate has gone down and uncertainty still precedes. One of the strong reasons behind the effect is inflated interest prices. Due to extremely high rates, people are unable to pay their house rent in times. When it comes to real estate, buy-to-let mortgage market has been affected by Brexit the most.
The Effect of High Inflation
The market of buy-to-let investment drastically rose in the beginning of the year. This continued for the first three months till a series of events took place. Firstly, the new tax rates were not very positive and uplifting for the prospective landlords. After Brexit hit the real estate market of UK, buy-to-let mortgage completely came down. The landlords are not ready to take risk and invest in the current market. Due to extremely high inflation rates, it is very hard to find potential customers and tenants for your building.
Lack of Potential Tenants
The whole buy-to-let mortgage market is dependent on the quality and quantity of tenants. Since, most landowners do not have enough amounts to begin with; they rely on their monthly rent income to pay mortgage loans. Due to this, there are an extremely low number of people willing to pay the rent expense regularly. Lack of availability of sufficient tenants contributes to the low market activity in buy-to-let investment.
High Interest Rates
Prospective landlords are not willing to take the risk of indulging in any expensive purchase. This is because of high tax and interest rates, lower number of tenants and inflation in the financial sector in UK.
Due to extremely low buyers, the rates of buy-to-let property have gone substantially down and there is a great opportunity for prospective landlords with ready cash. In the current market scenario, it is advisable to not spend too much on credit. Interest rates are going very high and any credit investment at this point will make your purchase very expensive and costly.
The real estate, pharmaceutical, energy, banking and other markets started to show affects prior to the actual happening of Brexit. Due to the fear of market going down, people stopped making any investment. This also reduced the prices and demand in various sectors. After Brexit, the market is slowly getting back on track. However, it will take some more time before the financial sector completely settles down. In short, the buy-to-let mortgage market has been adversely affected by the events following Brexit and it will take some time till everything gets back to normal.