Global financial advice company DeVere Group is pulling its UK property investment projects amid heightening economic upheaval.
The firm said that, with immediate effect, it will temporarily close its property investment division as inflation fears grow.
It believes the more inflation grows, the Bank of England will have to continue to hike interest rates more aggressively to combat rising prices.
James Green, DeVere Group investment director, said: “We are concerned about the availability of credit and, therefore, an imminent drop in property prices so we are temporarily suspending all property investment projects.
“We understand many clients around the world will be concerned about current mortgages and protection and, as such, we have put together a dedicated team to assist with these enquiries.”
Mini-budget backlash
This comes days after UK chancellor Kwasi Kwarteng received backlash for his tax-cutting mini-budget, which he partially u-turned today by scrapping the plan to abolish the £0.45 ($0.50, €0.52) rate of income tax.
The mini-budget in late September 2022 came under fire from several organisations including the International Monetary Fund (IMF) and it also caused the pound to deteriorate – but it has jumped back since.
The housing market was also impacted by the mini-budget as lenders withdrew nearly 1,000 mortgage products in a bid to grapple with the prospect of rising interest rates.
Nigel Green, chief executive and founder of DeVere Group, added: “The Bank of England’s chief economist has indicated that interest rates could rise sharply imminently. The markets are already pricing in 5.8% by next March. But I would not be surprised if interest rates reach above 7% in the spring.
“Understandably, lenders are suspending mortgage offers and, in turn, we’re now suspending our property investment division. A result of the mini budget is that mortgage prices are set to increase, and borrowers are to have less options. The chancellor and prime minister Liz Truss have recklessly gambled with the UK economy.
“The pound, gilt market, the stock market, and now the property market all reacted phenomenally negatively to their plans as the pull away from UK plc gathers momentum.”
