#034 Brexit Affecting Lending

In this episode, Ray and Nigel discuss the varying influences on investors and developers in connection with the impending withdrawal of the UK from the EU. They explore a central question of Brexit – uncertainty,  in connection with raising money, along with the possible opportunities for investors and developers. Ray and Nigel offer an insight into aspects of supply and demand in the property sector and discuss why demand will continue to grow. KEY TAKEAWAYS There will always be world events that create uncertainty. Business want to plan forward and some may use Brexit as an excuse but there were events prior to Brexit and there will be events in the future, there will always be something. Some see the uncertainty about Brexit as an opportunity especially with the underlying factor of 101. Economics 101 - demand and supply. The number of households in the UK is increasing and there is a shortfall of property. A household is defined as a person or persons requiring somewhere to live. Households are changing, with an increase in smaller households, driving the demand for more property. Statistically, the amount of land built on in the UK is very small but the amount of brownfield sites and the potential for development is huge. The section 24 tax changes mean that some portfolio landlords are cashing in and the evidence in some parts of the country indicts that rents are going up. In the podcast by Mark Homer ‘Mark my Words’, comments that as a landlord with a large amount of property in the Peterborough area he has seen an increase of 25% in rent during the last two years confirming the demand is there and rental returns are still strong. The supply of money is good, there is a lot of money out there and the price of money has come down. Big banks are trying to encourage seasoned developers and individuals who know what they’re doing to increase the supply. Businesses think it will be hundreds of smaller developers who will solve the shortage problem and so are keen to invest in the property sector. As lende,rs this sector continues to offer good opportunities to make money. There is too much that people value highly about the UK for Brexit to make demand disappear. Best Moments “Everything goes in cycles, always has done” “Strong demand to live here, so strong demand for somewhere to live” “People still want to make money, Lenders still want to make money, they are not going to shut up shop” “In property the demand is there” “There is too much that people value too highly in the UK for that demand to disappear” “Those that have gone for it are way ahead of the curve and they then take up the market they’ve got the capacity, they can flex, they can take things on and the person who’s delayed loses out” “Statistically the amount of land built on in the UK is very small” “Amount of brownfield sites out there huge” “If the proposal stacks up, like anything else you’ve got the crest model” VALUABLE RESOURCES https://www.angelsden.com/en-gb/events/ http://howtoraisemoney.co.uk/ For other podcast episodes mentioned: http://howtoraisemoney.co.uk/category/podcast/ ABOUT THE HOSTS Ray McLennan is a keynote public speaker and former corporate solicitor who has many years of experience owning and operating a variety of businesses in the UK and Ireland. Ray is the Regional Manager for Scotland & Ireland for Angels Den, which has over 13,500 high net worth Angel investors that help to find funding for property and SME businesses. Ray also helped to create Property Angels Den (PAD) in Sept 2014, which matches High Net Worth Investors with property proposals of all sizes. PAD now meets regularly and has funded dozens of property projects all over the UK. Nigel trained as an accountant but has for the last 11 years run the family care business. With a 7 figure turn-over and over 100 employees, the role has given Nigel quite a few valuable lessons! Nigel and his wife, have foc