Contractors' IFA sees softer Brexit as a good thing

Expectations that Theresa May has little political choice but to pursue a much softer Brexit than she wanted have reassured an independent financial adviser to contractors.

Luke Somerset, an IFA with the ContractorUK Money Club, says the PM’s “fragile” position might result in a “soft landing for Brexit” which would “be better” for economic stability.

Primarily a mortgages and buy-to-let expert, Mr Somerset also believes it might be better for contractors too, if they are seeking to buy their first -- or second -- property.

“Political uncertainty can benefit first-time buyers or those struggling to move up the property ladder, as fewer buyers can result in slacker house prices and reduces the risk of gazumping.”

He added that despite the uncertainty from the hung parliament election result, and the start of an informal Tory-DUP coalition, the mortgage market ‘still has money to lend.’

In line with his analysis, data by the Intermediary Mortgages Lenders Association reportedly show that first-time buyers are improving their success rate when applying for a mortgage.

Applications rose from 48% to 67% in the first three months of this year, as did the success rate of such buyers’ initial offers on their desired property, up from 70% to 84% in Q1 2017.

The rate of completions by first-time buyers has now improved more than any other segment of applications, including remortgage applicants and buy-to-let borrowers, the FT reported.

However, on learning of the UK’s hung parliament, which happened since the data by IMLA were drawn, the markets suffered a 5% drop in the value of the UK’s house builder shares.

The IFA to contractors isn’t overly concerned though. “[This] is understandable at times of market uncertainty,” he said.

“This reaction [happened] before following the [EU] referendum result, but a hung parliament is far less of a threat to house prices and the market in general.”

The financial adviser also thinks that aside from property, a hard Brexit being binned could see IT workers -- and firms -- rethink any pre-election pangs about staying in Britain. 

“We know that there have been rumblings from banks that a softer Brexit would see fewer businesses migrating to the EU”, Somerset said. “[This] has to be a good thing for our economy.”