OREANDA-NEWS. The UK vote to leave the EU could translate into longer-term negative sentiment for the UK property sector, but is unlikely to directly lead to near-term rating downgrades, Fitch Ratings says.

Uncertainty over the form and timing of Brexit will weigh on confidence for property purchasing and leasing. The ability of London's economy to remain strong in the long term will be a key factor in vacancy rates and the renewal of long-term lease agreements.

The recent gating of several property funds could lead to the sale of some property holdings and suspend a source of demand, which could lower values and increase LTV ratios. Early indications are that sellers will not lower values too readily, but the key test will be whether debt providers will be willing to refinance loan facilities and on what terms.

UK property values are highly cyclical, with UK residential properties historically having long periods of value growth, followed by shorter corrections. Big reversions in house prices in the UK have generally occurred after major economic events or interventions. The current market situation, however, is different from that during the global financial crisis due to the strong availability of liquidity.

For more information on how we see these factors affecting commercial REITS, industrial property companies and UK house builders, see the report "UK Property Companies Face Long-Term Brexit Pressure - Ratings Steady For Now" available at www.fitchratings.com or by clicking the link above.