Several months ago I put pen to paper and speculated on what effect Brexit might have on the residential rental market in Scotland and concluded it would mean very little.
That, of course, was at a time when I (and probably most of the country) presumed the UK would vote, by a fairly comfortable margin, to remain in the EU. So now the unthinkable has happened, have I changed my tune?
To some extent the answer is yes but only for the short- to medium-term given that the UK’s negotiations on leaving the EU may take two years to complete and that looking beyond that is purely guesswork. Despite the momentous nature of the decision, the world hasn’t fallen about our ears.
The rental market continues to address the specific accommodation requirements of large sections of the population – eg moving to another part of the country to take up a new job, couples setting up home together, marriages breaking up and spouses deciding to live apart. These things will go on as before and the rental market will fill much of the void, largely because it offers a flexible form of tenure that ties in with changing lifestyles.
Demand for rented accommodation will continue at its present rate at least among the indigenous population. Which brings me to the role of EU immigrants in the rental market. Of 389 new tenant applications handled by our Edinburgh office in June, 26.2 per cent were from foreign citizens.
However, only 14.4 per cent were citizens from other EU countries with an automatic right to live and work here; the other 11.8 per cent were from outside the EU and to reside in the UK meant they had to have a special skill or were high-end students. During the referendum campaign the immigration issue was said to be about the UK’s ability to control numbers and not just the numbers themselves, so we can infer that demand for accommodation from overseas professionals and students outside the EU will not appreciably alter.
First-time demand from EU tenants is likely to reduce significantly once Brexit becomes a fact but the market is likely to be able to handle this.
Consequently, this should prove reassuring for private buy to let investors.
• David Alexander is managing director of Edinburgh- and Glasgow-based DJ Alexander Lettings