As you know, rents are supply and demand. Landlords provide the supply and non-home owners provide the demand.
Net migration into the UK is about 330,000. These people need to live somewhere. Most don’t have cash to buy a house and so… yes, you guessed it, they have to rent. The current rental yields are underpinned by this net migration figure. If Brexit means cutting the net migration then for every person that does not come to the UK, the rental market softens.
This is good if you are looking to rent but bad if you are a landlord or homeowner.How will this play out? We suspect that many landlords will get out of the letting game and put their stock of houses up for sale. This increase in the number of houses for sale should cause houses prices in the UK to fall.
So, we think Brexit will cause a drop in the cost of renting but this will stabilise and hit a floor when landlords sell their buy-to-let properties which will reduce the number of properties to rent. This increase in properties for sale should cause house prices to fall although it is unclear how far.
Therefore: Brexit = lower rents and lower house prices.