The House of Lords has upset the applecart by demanding that, prior to Brexit negotiations taking place, the government guarantees residency rights for citizens from other parts of the EU already living and working in the UK.
As a dedicated “Remainer” I gave a hearty cheer even if a similar victory is unlikely when the issue goes back to the Commons.
Migrants are here, most of them are working and they require a roof over their heads
And I can understand the government’s position because guaranteeing the rights of EU citizens here without a commitment from the EU to reciprocate would be like writing a blank cheque.
Also I suspect the government sees the issue as bargaining power in trying to secure a positive trade agreement, post-Brexit; EU migrants are mainly from member states with underdeveloped or sluggish economies, which effectively means Britain is giving employment to three million-plus EU citizens who might otherwise be out of a job.
But that’s an issue for politicians; the migrants are here, most of them are working and they require a roof over their heads and (lest it be forgotten) the private residential rental sector has filled admirably what could have been a serious housing void.
With few immigrants having any long-term credit record in the UK, it is unlikely many would be able to secure a mortgage, even if affordable, so it’s fortunate for those companies employing immigrants that the rental sector has been able to meet their accommodation needs.
On a pro rata basis, EU immigration to Scotland has only been around half the level of England but the numbers here are still sizeable. Our own statistics, relating to the background of applicants for tenancies, has shown that for the past 18 months between 25 and 40 per cent of monthly applications have been made by foreigners, although a substantial minority of these have been from countries outside the EU.
So should any landlord invested in rental property be concerned about the still undecided future of EU immigrants, given their contribution to rental demand and, consequently, to keeping rental rates ‘buoyant’?
My opinion is that whatever the outcome of the Brexit negotiations, EU citizens already domiciled here will retain their right of residency – because it is in the economic interest of both the UK and other EU countries.
Consequently, any landlord with a good-earning property which has also shown underlying levels of capital growth over several years, would be ill-advised to cash in the asset over fears of a mass exodus of EU tenants. This is especially so at present given the alternatives are a stock market which, though still rising, is believed by many to be due for a downturn; or savings accounts whose returns are trailing the cost of living.
It is possible that we may see some immigrants returning to their countries of origin of their own volition, deciding that Brexit will be an opportune time to go home. But I believe their numbers will be relatively small.
It is also important to point out that the majority of people seeking rental accommodation in Scotland are themselves Scottish or from other parts of the British Isles.
In Edinburgh, where rental demand is strongest from professional and skilled people, applicants from England, Wales and Ireland are being drawn to the city in rising numbers by employment prospects and a desire to be part of the cultural and social ethos. And don’t forget, also, that portion of demand among incomers from non-EU countries who will be unaffected by any Brexit deal.
For this reason, any correction in the rental market caused by the voluntary departure of some EU citizens is likely to be manageable, and temporary. Rental rates have fallen in the past, for reasons which have had nothing to do the EU, and have recovered.
No one claims rents will always rise inexorably; but the historical trend is underlying growth which is almost certain to continue.
• David Alexander is managing director of DJ Alexander