It’s now just two days before Britain’s electorate has its say on the country’s continued membership of the EU, with the temporary pause following the death of MP Jo Cox reverting to a typically frenetic lead-up to voting day.
Senior figures in the UK property market have been sharing their views on what may happen if we leave or stay. Yesterday, we heard from UK housebuilders about how the construction of the new homes this country needs might be affected. Today, we look at the views from other sectors within the residential property market.
Estate agency Romans, which operates in many offices renting and selling property in the Home Counties, recently undertook a poll and found consumer opinion to be almost equally divided, with 45% saying ‘Remain’ and 44% saying ‘Leave’. With 11% undecided, the final vote could go either way, and this volatile position has had an effect on the market.
“This uncertainty could cause people to delay their next move or investment purchase as they wait to see what the outcome will be,” says Antony Gibson, residential sales director at the firm. “This would slow the market down and result in a continued supply and demand imbalance. The truth is nobody knows what will change if we did leave the EU, so it is near impossible to predict what will happen to the local property market, if anything at all.
“I believe that in the long run, the residential housing sector will experience little change, with the main reasons for moving outweighing any economic uncertainty, such as downsizing, upsizing, moving to be close to good schools or your new job” adds Antony.
Romans has also seen evidence that investment is slowing until a decision is known, leading to developers and housebuilders pausing plans to undertake and continue projects.
“A lot of the predictions are focused on the London property market, which relies heavily on international property investment,” says Michael Cook, Romans’ lettings managing director. “I personally don’t believe the results of the Brexit vote will have a large impact on property investment in the local area, other than the uncertainty leading up to the results.
“If we do leave the EU following the referendum and the rules and regulations surrounding property investment change, assuming the post-Brexit government decides to exercise its freedom from EU rules on property ownership, we may see some fluctuations in the local area, however this could take months, if not years, to implement.
“Plus, the UK will always attract foreign investment from Europe and beyond, with many people moving here due to the schools and the lifestyle, which won’t change whether we stay in the EU or not.”
Stephen Matthews, director at London estate agent Greene & Co., has also seen buyers and sellers playing the ‘waiting game’ until the votes have been counted. “As a result, we’ve seen a slowdown in activity levels over the last few weeks. It’s important to note however that despite speculation, we see this merely as being a delay to the market; as with all elections and referendums, the property market experiences a slight dip and normally recovers relatively quickly once the results are known.”
Matthews also points out how necessity is the primary factor for many in the market and that this necessity outweighs the larger economic picture in the end: “Families need to move because of schools, jobs and changing circumstances and those factors will always override economic uncertainty.
“In the case of a Brexit, it may take a little longer for the uncertainty to die away as we wait for the renegotiations with Brussels to take place but in the long term the UK property will return to its position and a bastion of strength.”
Martin Bikhit, managing director of central London agency Kay & Co, has seen specific reference to the EU referendum in some deals in the past weeks and months, caused by the uncertainty of the outcome: “This worried feeling is translating into some of our clients putting ‘Brexit clauses’ into their sales contracts, whereby in the event of a Brexit the vendor will offer an incentive on the price of their property, to reassure the buyer that they do not stand to lose anything from the referendum.
“We have even witnessed developers offering such incentives as a no-quibble deposit refund if the referendum produces a result unwanted by a buyer!”
“A Brexit would certainly mean a period of adjustment as the UK forges new trade deals, and this could see the market flat-line. We would also most likely see a fall in the value of sterling, which may make London property more attractive to foreign nationals as our prices would be lower in their home currency.”
Brendan Cox, managing director of Waterfords, has expressed the view of many, that “trying to second guess which path the property market will take off the back of the political landscape is purely speculative”. He has seen a traditionally busy spring property market quietened by uncertainty but believes that over the long run, there will be little permanent impact of the market as a whole and that “it is likely the same number of transactions will occur, just spaced differently around the referendum.”
Cox believes that in could take many years to formally negotiate Britain’s exit from the EU should that be the way the vote goes, leading potentially to a gradual decline in the property market, first in London, then rippling out to the Home Counties. However, he also points out that “if the UK were no longer tied to EU regulations and attracted more local investment, the property market could also benefit”.
Whichever way the majority vote, Cox believes that “the fundamentals in the UK housing market will not change, in that it is a long-term sound investment and home for foreign investment money. We also have an economy that is faring considerably better than many in Europe and the world.”
Ben Habib, chief executive of property fund managers First Property Group, is blunt about the market in the capital. “It’s very easy to blame everything on Brexit,” he says, “but costs have gone up very substantially over the last few years and with yields currently so low in London, it just doesn’t make sense to be buying right now.”
Outside of the South East, Ben Grove, managing director of Worcester-based estate agents Estates Direct, has also seen “a degree of nervousness” amongst sellers, which has actually led to more property going onto the market “because of the fears vendors have that a vote to leave would lead to lower property prices.”
He adds: “The general trend in Worcestershire is one of rising prices and the available housing stock is selling quickly. We have also seen record levels of prospective buyers registering with us and demand for properties has never been so high. There is a lot of action in the market right now which is giving local buyers confidence it is a good time to move."
He concludes that “a vote to remain in the EU… could see house prices continue to rise. A Brexit vote however…could see lower demand with prices falling or stagnating. Not great news for sellers but it may help more first-time buyers get a foot on the property ladder.”
Paula Higgins, founder and chief executive of the HomeOwners Alliance, sees a number of factors potentially changing, with EU regulations on things such as where we can build new homes, the eco-effects of new homes and the general application of VAT. Overall, she says, “there are quite a few reasons to think there could be downward pressure on house prices, upward pressure on mortgage costs, slightly lower moving costs, and more expensive extensions” should Brexit occur. “But if you have a big mortgage, are trading down and want to refurbish your new house, you could be worse off.”
“Like all economic predictions, this all comes with a blood-pressure raising big dose of salt. Most people thought that the City of London would be finished if we didn’t join the euro.”
The effect of this week’s referendum not only has impact of foreign buyers in Britain – there’s also the possibility of repercussions for British buyers who already own, or are looking to purchase, a home in Europe. Peter Esders, commercial director at overseas legal specialists Judicare, believes it would be far too complicated for there to be new rules for Brits already owning homes overseas: “With so many British people owning property in Europe and Europeans owning property in Britain …we think that this is unlikely as the mechanics of unravelling the current situation would be too much to consider.”
Overall, Esders believes that so much has already be done in terms of property ownership, residency and tax obligations that even if the vote leads to Britain leaving the EU, “as there is already so much interaction between the countries and so many Brits living and working in Europe and even more who own property, it is likely that it would be necessary to put into place treaties to recreate the situation that we have at the moment or at least allow those who are already in the system to continue as they are.”
His sentiments are shared with Branson Atterbury, marketing director at Austrian developer Kristall Spaces. “I believe the effect of a Brexit on property ownership in Europe is likely to be minimal,” says Atterbury. “The Swiss and Norwegians have not been penalised and there are lots of Americans, Russians and Chinese with property in Europe. A Brexit would have no impact on the UK's extensive double tax treaty network, which is not based on EU membership.”
John May, of Sell4LessSpain.com, believes the lifestyle choices of buyers will ultimately not be affected by any change in Britain’s position within European politics. “What will happen is but a guess,” he says, “although the one thing that is guaranteed is that British and other northern European citizens will always want and seek out a life under the Spanish sun, so long term, personally, I doubt there will be much change either way once the dust has settled.”