How to make your property portfolio ‘Brexit-proof’

With the uncertainty around Brexit, it is literally impossible for property investors to start making informed preparations as to how to respond to Brexit. 

It is, however, entirely possible for people to work on the basis of “hope for the best but prepare for the worst” and, if necessary, update their property portfolios accordingly.

With that in mind, here are some points to consider.

A hard Brexit could see the pound drop

Anyone who’s paid attention to the currency markets over recent years will have seen for themselves that the value of the pound has gone up whenever there have been indications that the UK is heading for a soft Brexit and that it has gone down again whenever there have been indications that the UK is heading for a hard Brexit.

While a weak pound is bad news for most importers, its great news for the inbound-tourism industry since it both encourages Brits to “holiday at home” and international visitors to come while the UK is at its most affordable. This could, therefore, be a good time to look at property in popular tourist destinations.

Interest rates could be volatile

Right now, interest rates are about as low as they can possibly be (without actually going into negative-interest-rate territory), this means that there is far more scope for them to go up than there is for them to go down, particularly if the pound softens and the government wants to increase its attractiveness on the currency markets. Investors using leverage (mortgages) may, therefore, wish to think about their potential exposure and whether it would be appropriate to reduce it.

Property investors can still buy into Europe – and beyond

Even though a hard Brexit will, presumably, place some limitations on the freedom of movement of people, goods and, in principle, currency, the fact remains that these days individuals can send money around the world in seconds via an app on their smartphone.

The fact also remains that international governments are likely to be as happy to continue to receive investment funds from the UK as the UK will be to continue to receive investment funds from international investors. That said, if there are markets in which you are particularly interested, it may be worthwhile opening a local bank account to make it easier to move quickly if the need arises.

Property means more than residential property

Although the term “the property market” is often used as shorthand for “the residential property market”, there is also a thriving commercial property market and property investors based in the UK may wish to keep this fact in view as it could provide a useful additional layer of diversification after Brexit. Investors “moving across” from residential property might wish to focus on forms of commercial property which closely resemble the residential market, such as purpose-built student accommodation and retirement accommodation.

(Featured image by DepositPhotos)

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DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.