With the EU referendum vote looming large, many landlords – particularly those reliant on tenant employed by multi-national companies or the financial services sector – are wondering whether a vote to leave will lead to an exodus of large employers, cooling tenant demand, or if a Brexit may boost the lettings market – at least in the short-term – as corporate tenants and their employers adopt a “wait and see” approach while political and financial uncertainty persists.
Cory Askew, Executive Director at Chestertons and area manager for the City, Docklands and wider east London, says: “A vote to leave the EU on 23rd June looks increasingly possible as the opinion polls narrow, landlords, letting agents and corporate relocation specialists shouldn’t worry too much. Whether we wake up on the 24th June ‘in’ or ‘out’ of Europe, it will be several months before the true consequences of either outcome become clear.
“Many have argued that a Brexit decision would be disastrous news for the City and Docklands, and that a possible exodus of multi-national companies’ headquarters and their employees would almost immediately ensue, but realistically this is almost certainly not going to happen, not least because of the huge costs involved. HSBC has already committed to retaining its global HQ in London, at least in the medium-term, irrespective of the outcome of the EU referendum.
“A Brexit decision could result in further corporate fence-sitting and, under those circumstances, we would expect international businesses and the people they employ to maintain a ‘holding pattern’ until clarity emerges. In theory at least, this could boost rental demand, as employees aren’t likely to buy a home in London if there’s a chance they may have to relocate at some point in the near future. Tenants in this position would more likely continue to rent, while the demand for short-term accommodation and corporate ‘short lets’ may rise as staff moving to the UK to take up a role are likely to be posted on shorter, fixed-term contracts, at least until the dust settles.
“Landlords, especially those operating in markets that are particularly dependent on sustained demand from employees of large multinational corporations – areas such as Canary Wharf, Docklands, City fringes, the Southbank between London and Tower Bridge, Bermondsey and Greenwich, for instance – need to be well attuned to this opportunity and should not hesitate to act decisively to seal a tenancy agreement wherever they have a reasonable offer on the table.”