Pushed back Brexit date allows investors more time to 'Brexit-proof' their portfolios

With events this week including the start of an indicative vote for MPs to decide what the next steps will be in the Brexit process, and exit date of 29th March look unlikely. With the options available for parliament to vote on, Brexit dates could be delayed until April or May this year, see another general election and referendum, or even see a delay until mid-2020. In this midst of all this uncertainty, however, property industry experts remain positive on the long-term outcomes for the industry and those investing in it.

Managing director of Surrenden Invest, Jonathan Stephens, said earlier this month: "The extension to Article 50 is just the latest twist in the ongoing Brexit uncertainty. We're finding that many investors are tired of waiting to see how it all settles. After all, the current wrangling is only over the withdrawal agreement - there's still an incredible amount to actually sort out once the 29th March / 12th April / 22nd May deadline has passed."

For those still wanting to invest in the property industry - which is proving to be an all-round good investment option still - successful investors will be those who focus on the medium to long-term opportunities. Those taking into consideration the long-term rental yields rather than the assured returns offered for just a few years, and those looking at long-term capital appreciation, will get the most out of their portfolios post-Brexit. A trick with this sort of opportunity is to be able to look past the current climate of an area and look to how this will be redeveloped and invested in in the future.

Cities such as Manchester and Sheffield will be seeing massive injections of government regeneration funding over the next few years, which will not only see an increase in demand for high-quality accommodation, but also a rise in rents and property prices. In fact, we've already been seeing this taking effect in Manchester over the past two years. By focusing on these areas where rents and property values are quickly increasing, investors are guaranteed to not only improve the rental yields after the assured term, but also have great capital gains. "Landlords who focus their attentions on the best-placed developments look well positioned to beat the continuing Brexit uncertainty" (Landlord News).

This Is Money recently reported that 23% of property investors in the UK market based in the United Arab Emirates or Asia still considered the UK a hotspot for income-generating opportunities; and over half of investors expected the UK market to stay 'good to very strong' over the coming year. This is also echoed in the commercial investment sector, as well as residential, with recent research from Knight Frank finding that the UK still claims its position as Europe's leading commercial investment market.

Despite uncertainty, both Knight Frank and Experience Invest Shows that the vast majority of property investors in the UK are looking to grow or maintain the size of their portfolios in the next 12 months, whereas only 11% are looking to reduce their portfolio size. There has been a shift, however, in the types of investments this group are looking at. A number of investors of HMOs are now looking to apartments blocks (especially studios and one-bedroom units) in city centres to keep up with the demand from the student and young professional market; although houses are still the most popular option with 67% of investors having this type of property in their portfolio, compared to 54% having apartments. New-build properties have also seen an influx in popularity over the past decade - 39% of investors have new-build or off-plan accommodation in their portfolios.

Chairman of Homes England, Sir Edward Lister, said speaking at MIPIM: "There is massive shortfall and demand is just going to continue - people need somewhere to live so ignore Brexit, the need is still there."

A keys focus for Homes England over the coming years is 'accelerating construction and increasing productivity through offsite manufacturing technology' and filtering this down from investment property to general residential property. In its strategic plan for 2018 - 2023, Homes England stated that it would be investing £5.5 billion into a Housing Infrastructure Find and over £1 billion into a Land Assembly Fund to ensure 'challenging sites' would be able to progress and build the UK market.

In a following MIPIM dinner, which saw industry leaders gather earlier this month, it was the general consensus that property would weather Brexit and that political uncertainty wouldn't have a long-term effect on the market.

British Property Federation chief executive Melanie Leech, said: "People are so frustrated and are in such despair about the abject failure of our politicians to show some leadership and give us a way forward that it's not worth talking about."

Harley Kagan, managing director of United Trust Bank had more to say on the matter, suggesting that those looking in the long-term when planning their options into property investment would be the most successful, and warned those looking at the short-term capital bounce back. "People make short-term decisions today because of immediate uncertainty that have long-term implications. Momentum takes a long time to build."

One factor that is growing the market for investors is the number of home-owners that are refraining from putting their properties on the market until after Brexit is resolved. Since the 2016 referendum, 33% of home-owners looking to sell have said they are waiting until after Brexit to put their properties on the market, according to online mortgage broker Trussle. Their research found that over one million home-owners thought that uncertainty around the exit from the EU was driving down house prices and the chances of selling their property successfully. This has also been true for investors with a focus on 'flipping' or capital appreciation over the short-term.

With this major keep-back of putting houses on the market by home-owners, city centre living and rental accommodation has become much more popular. 'Generation rent' is now looking to rent for longer and longer, and are looking to spend more money than ever on boutique style living rather than HMOs. City centre living is fully back in fashion, especially in apartments which offer high-specification, technology-driven, eco-conscious benefits, as well as residents' only facilities.

This lack of supply on the market has benefitted other investors, however, especially those turning to city centre apartments and new-build properties. With 'generation rent' still growing demand for high-specification rental accommodation, rents are now higher than ever; both as a consequence on higher-quality living and in the lack of supply vs demand. This lack of properties on the market has seen prices generally increase, however, in the off-plan market they are still lower than ever, opening up opportunities for high capital gains in the long-term.

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