With the ‘Brexit’ referendum on Britain’s continued membership of the European Union taking place this Thursday, there are just a few days left for voters to decide the pros and cons of the arguments on either side.
The property industry has not kept quiet in the run-up to the vote, and here we take a look at some of the views given by senior figures across the new homes sector.
Jason Rishover, chief executive of developer Heronslea Group, says: “We build in the ‘super suburbs’ of north London and Hertfordshire and following a rush in sales to beat the stamp duty changes in April we have noticed a slowdown in recent weeks. Buyers seem nervous about what impact the Brexit referendum will have on the housing market. They are not committing and this is affecting the key summer selling period. There is a lot of speculation at the moment that house prices will go up or down depending on the vote.
“If we stay in it is likely that business will return to normal, if we leave there will widespread uncertainty until the final negotiations of leaving are complete and this is likely to affect the economy, housing market and unemployment. With prime London house prices already struggling, this will ultimately make it worse.”
Karl Hick, who runs Larkfleet Homes and Allison Homes, is in the ‘Remain’ camp: “If we vote on 23 June to stay within the EU we can be sure that things on 24 June will be pretty much the same as they were on 22 June. That, in my view, would be good for the UK economy, good for business and good for all of us as individuals.
“Those who advocate leaving the EU are in no position to offer certainty. The only certainty they offer is that, if they win the vote, the future on 24 June will be uncertain.
“Uncertainty means job opportunities lost, businesses not started, homes not built. Carried forward (as it will be if we vote to leave the EU) uncertainty also risks becoming higher inflation, higher mortgage rates, higher unemployment - and lower wage growth for those still in work.”
Bellway sales director Ben Smith has seen little effect on buyers in the months before the referendum: “Just like last year’s general election, the ‘Brexit’ vote has failed to deter people from making the move to a new home. There has been a lot of media speculation about the possible effects of an in or an out vote, but this seems to have had little impact on people’s actions.
“Confidence in the economy overall remains strong, interest levels are low and people appear to have become fatigued by negative media coverage about the economy. Instead, they are focusing on their personal finances and many feel these are improving. People’s experiences during the downturn and increased financial regulation have ensured caution still prevails, but this is increasingly manifesting itself as cautious optimism.”
The founder of former WhatHouse? Housebuilder of the Year Weston Homes, Bob Weston, has also experienced strong buyer interest despite the uncertainties the vote may lead to. He has told industry publication OPP: “I can’t speak for others but at the moment our business is generally unaffected by the vote uncertainty. The industry has probably been more affected by the forthcoming changes to SDLT for additional properties.”
“As for the impact on the property market, you can overthink both sides of the argument until you come up with the answer you want hear. The truth is that no one knows. In terms of the housebuilding/construction sector, if leaving the EU means we don’t have free movement of people in Europe, who is going to build the extra 100,000 new homes a year that the government says we need? It could have long-lasting ramifications for the industry.”
Andy Hill, chief executive of current Housebuilder of the Year Hill sees major ramifications if British voters decide that the country should leave the EU. “A Brexit would have severe consequences for the British property industry and economy in general. As Europe’s largest powerhouse, our economy is very much strengthened by our position within the EU, which brings numerous benefits that largely outweigh the costs. Exiting this arrangement will likely result in a large-scale slowdown that I believe will take many years to recover from.
“Recent interventions from the government on the second home and investment markets are already having far-reaching effects. The forthcoming abolition of mortgage interest rate relief and the additional 3% stamp duty levy for investors have resulted in a general decline in transactions across the board, while in the owner-occupier market we are seeing a lack of consumer confidence in homes priced upwards of £600,000.
“Many of our potential customers have put off their decision to move further up the ladder until the result of the EU referendum is known and it is my belief that a vote to leave will only further deter investment in UK property. It is widely acknowledged that we need to build more homes more quickly, with more than one million required by 2020. Without investment coming into the UK at current levels however and demand diminishing significantly, developers would likely pull away from building more homes and this figure will be incredibly difficult to meet.”
Another advocate of the ‘Remain’ view is Monika Slowikowska, founder of Golden Houses Developments: “The UK would be worse off in terms of its ability to recruit good people and attract foreign investment and funding for regeneration schemes. Procuring building materials in the quantity we need and at the prices we currently pay could also be a problem if Brexit leads to import tariffs and quotas.
“In the UK, one construction worker in ten was born outside the UK, yet the sector is still held back by a skills shortage. A leave vote would exacerbate the problem. These workers would find it harder to come to the UK compared to say, Spain, Germany or France. This in turn would increase labour costs, which have already gone up by an average of 8% in the last six months alone.”
“The European Structural Investment Fund (EUSIF), European Regional Development Funding (ERDF) and Joint European Support for Sustainable Investment in City Areas (Jessica) have, between them, contributed billions towards regeneration projects across the UK. As one of the EU’s biggest net beneficiaries of these schemes, we stand to lose a great deal if we leave the EU.”
Spencer McCarthy, chairman and chief executive officer at Churchill Retirement Living, is also leaning towards staying in the EU: “We have all been hearing the reasons why we should leave and why we should stay in, there is a lot of scaremongering going on by both sides and I can also see some real positives to either outcome.
“Like many other developers we’re seeing a shortage of skilled labour in our South East and Eastern regions, and leaving could restrict the supply of labour from the rest of the EU which will be needed to make up for that skills shortage. So that’s one strong argument to remain.
“From a housebuilder’s perspective, I also think a vote to remain will be a much lower risk to the economy. A strong and stable economy means a stronger housing market and more demand for our product, which in turn means safer job prospects for my employees. I don’t mind taking risks, I have been taking calculated risks for most of my life, but this is one risk I don’t want to take.”
One strong supporter of the ‘Leave’ campaign is John Elliott, managing director of Millwood Designer Homes: “The EU question affects how the UK works with Europe, but our housing market is home grown and many initiatives set by EU law are detrimental to us.
“Under the EU Habitats Directive (also included in the conservation of wild birds) there are particular constraints for the building of new homes. Firstly, the mere hint of great crested newts, which are prolific in the South East of England on a site, can delay the building start for many months. However, in Northern Europe the crested newt is rare and is given special protection. This regulation to suit Europe has an unnecessary impact on the UK.
“’Special Protection Areas’ have also been established through European directives, which have been translated by the UK Joint Nature Conservation Committee and, in the case of Ashdown Forest in East Sussex, have resulted in a 7km zone around the forest where building could only take place if would-be builders were to provide SANGS (Suitable Alternative Natural Green Spaces). This means that if you build on two acres you need to provide two acres elsewhere in the vicinity to compensate for your ‘nitrogen deposition’.
“More recently the European Union’s Mortgage Credit Directive effectively means that no housebuilders are now able to lend money to their buyers unless they register as a regulated financial adviser. When times are difficult, it has been a traditional way for housebuilders to help their buyers overcome mortgage down-valuations and other issues.
“Obviously I do not know whether the worst of these directives will be repealed should we achieve Brexit but, for certain, it would reduce the continual flow of yet more red tape.”
Richard Conroy, chief executive of Yorkshire-based housebuilder Conroy Brook sees very little effect on his business whichever way the vote goes this Thursday: “The whole housing industry seems to be holding its breath ahead of the vote, and even customers appear to be apprehensive about committing to a new property as they wait to see what the outcome of the referendum is.
“In terms of our supply chain we purchase products for our new homes from around the world including here at home and both inside and outside the EU. Interestingly the Swiss seem to manage quite well despite not being in the EU! We also use very little foreign labour or tradesmen, preferring to employ a local Yorkshire-based workforce where possible to support our community. So in this respect, whether we are in or out of the EU shouldn’t impact our business.
“Even if a ‘Brexit’ were to cause some short-term problems for the industry, and the property market, it will not change the fundamental property demand and supply mismatch that will ensure a long-term demand for new homes.”