Will real estate prices rise after Brexit?

Living in the UKHow Brexit is affecting the UK real estate market

Mareen Johnson can only receive visitors quietly at the moment. She doesn't want to wake her newborn twins. "One of them just woke up. Do we want to go into the kitchen? The kitchen was added later, around the 1980s. That's why the house is much bigger than the original."

Mareen Johnson walks through her narrow terraced house in South Woodford, a suburb of London. The fireplace in the living room is still the original from 1885. Mareen Johnson lives here with her British husband, for whom she moved from Germany to England. Her two daughters joined us 14 weeks ago. "We bought the house here in 2014. For a good price. It was a good size for us, until we realized: We were going to have twins."

Falling prices to the detriment of homeowners

To buy a bigger house, the Johnsons would have to sell their current one. "We expanded the attic and everything. We just put a lot into it."

This article is part of a five-part series of reports on Europe's Real Estate Markets - Buy, Build, Exclude.

So the Johnsons expected the selling price for their house to be higher than the original purchase price - so they could earn. But real estate prices in London have fallen since the Brexit referendum. After the 2016 vote, the family home was worth less than before.

"If you get £ 120,000 less for the house than you expected, you can pay less for the next house. And since houses in London are so expensive anyway, that was a huge problem for us. And then we said: We." don't sell. "

Buyers benefited

Others have benefited from the low prices: first-time buyers, for example. Or landlords like Richard Blanco. He buys houses in need of renovation and renovates them - in order to then rent them out and earn long-term income. He opens the door to his newest property in London's hip Hackney neighborhood.

Blanco got a bargain with the five-bedroom house, he says. "The great thing about this house is that I bought it for a price 15 percent below market value - shortly before the Brexit deadline of March 29, 2019. Everyone was nervous. Nobody bought houses. And tenants also moved less often . "

Controversial right-to-rent policy

It's not just Brexit that unsettles tenants: In 2016, Theresa May, as Minister of the Interior, enacted a series of measures designed to keep illegal immigrants out of Great Britain. Under the Right-to-Rent Directive, landlords in England have since had to check whether a potential tenant has the right to stay. If property owners rent to someone without a residence permit, they face fines and prison sentences. The tenants may be deported.

(Deutschlandradio / imago / Jürgen Schwarz)

The High Court in London ruled the right-to-rent regulation illegal last year. The appointment process is currently ongoing.

Most landlords hope that the regulation will be reversed, says Richard Blanco. He represents the London members of the National Landlords Association.

"I understand my colleagues who complain that we are supposed to be border guards, so to speak."

No rental agreement for EU citizens without a right to stay

In times of Brexit and its imponderables, some fear that the directive could in future also affect EU citizens without a right to stay. An EU passport is valid as proof of the right to stay until the end of the year. But one in ten EU citizens without a British passport already has difficulties signing a rental agreement if he or she cannot prove a separate right to stay.

That was found out by the organization "the3million", which campaigns for EU citizens in Great Britain. According to her, around one million EU citizens have not yet applied for the right to stay - including Richard Blanco's sister. She only has a Spanish passport.

"She worries that she will be deported and that the authorities might think that her papers are not in order. Theresa May has fueled these fears with her deterrent policy."

"Ethnic origin or nationality are irrelevant"

However, Blanco is not afraid that future landlords might prefer prospective tenants with British passports to those with EU citizenship: he himself has rented all of his 13 properties to EU citizens, as he says.

"I'm looking for the best tenant. What interests me is: Will he handle the property carefully? Will he pay his rent? His ethnic origin or nationality does not matter to me. And I think most landlords see it similarly. "

Play it safe: British citizenship

Mareen Johnson at least remains unsettled. She'd rather be on the safe side.

"We thought that nothing could happen to me when we were married. But they can actually kick me out of the country if they want, which is extremely unlikely. But it could happen, and that's why I'm in the process of doing the British Accept citizenship. "

And maybe it will still work out with her house sale and a larger home: Since the election victory of the Conservatives in December, real estate prices have been rising again.

"In the meantime the price has gone up again to 50,000. What happens as soon as Brexit is completely over, or whether something goes wrong? Who knows what the future will bring."