This, if the Remain campaign bunf was actually accurate, is the end of days. The Great British people have voted to leave the European Union, carving a path for what most economists and informed businessfolk expect to be an extremely rocky couple of years – but all that is already being tempered by a tremendous sense of hope for the future amongst victorious Brexiteers.
Whether the dire economic forecasts come to pass, or whether they were – as Leave campaigners insisted throughout – more about scaremongering, will only become fully clear once negotiations with the EU and many of the other countries in the world get underway. In the meantime, there’s a lot of domestic housekeeping to get done: it’s very likely that David Cameron will have to walk away from No.10 [** Update: Cameron has said he will quit as PM “by October” **], and that’s likely to prompt a General Election – which will create even more of the uncertainty that markets, businesses and property buyers and sellers love so much.
For the property industry, however, it’s probably going to be alright. As Savills sanguinely pointed out even before the Referendum campaigning got ugly, “the drivers of death, debt and divorce will continue to drive [property] turnover”. Whatsmore, a sterling nose-dive is well underway – the biggest fall in value since 1971, taking it to the lowest level against the USD since 1985 – making UK property assets a veritable bargain for overseas buyers. This may not be the ideal scenario – especially for Londoners (or Mayor Khan) – but it should keep stock moving and agents in play.
Market forecasts have been unanimously bleak in the face of a Brexit, with Zoopla expecting house prices to tumble by 20%, the Treasury forecasting a 10-18% drop in property values by 2018 compared to what would have happened if we’d voted to Remain, and top London developer Galliard Homes warning that construction costs may rise by up to 15% – which could affect how many affordable homes get built, as well as housebuilder profits.
Here’s what the prime residential property industry is making of this properly monumental decision:
** This feature will be updated throughout the day as more responses come in **
It is hard to see any good side of the Brexit result in the near term
- Charlie Ellingworth of Property Vision
“It is hard to see any good side of the Brexit result in the near term except that the fall in Sterling will give any overseas buyer a window of opportunity to buy cheaply. The most likely scenario is one that we have seen before in other times of dislocation – 1987, 1998 and 2008 – a period where the market seizes up and the only activity is between the brave and the desperate. London will be more affected by the result as many of the buying decisions are more discretionary. The country, which tends to be driven by lifestyle needs and where the owning period much longer will probably feel the turbulence less. That period will end, but the summer will be long and difficult until the uncertainty passes.”
There are, however, far more pressing matters determining the wellbeing of the UK property market
- David Hannah, Principal Consultant at Cornerstone Group
“Whilst certainty will fuel the property market, it is ‘Blexit’ rather than ‘Bretix’ that will deteriorate the health of the property economy.
“Whilst today’s outcome means we will no longer be European citizens, the UK property industry will remain an attractive proposition to the global community. With the Brexit question now answered we can expect an influx of activity in the market over the summer months from domestic and international buyers, as it was the uncertainty, rather than the actual outcome that has been stalling the market over recent months.
“There are, however, far more pressing matters determining the wellbeing of the UK property market. Brexit has distracted from a plethora of damaging changes to the market including the 3% ‘second home tax’, the lowered annual tax band for properties held in companies, known as Annual Tax on Enveloped Dwellings; but most importantly the disastrous effects of the removal of mortgage interest relief for buy-to-let investors. These policy areas have always belonged to the UK Government so we have the power to implement immediate change.
“’Blexit’ (the exodus of buy-to-let investors) has done more to damage confidence in the market than the looming prospect of Brexit has by far and unfortunately, unlike Brexit, the public won’t be able to exercise their democratic right on the matter! Buy-to-let entrepreneurs have powered the market for the last 10 years, bringing investment into the UK property market at a critical time when the state was unable to keep up with demand; raising the quality, choice and accessibility of private rented accommodation.
“Government tampering with the buy-to-let sector will continue to hit the market, individuals and families hard. As the private rented sector rapidly shrinks we should expect to see higher competition, hiking rents and lower quality for the UK rental sector – and is unlikely, as the Government would like us to believe – boost homes available for first time buyers and families. This is simply a matter of practicalities. Until we tackle the shortfall of affordable mortgages and access to finance, not just homes, we should think twice about pushing out the wealth already invested in our property sector when there is limited prospect of replacing it.
“When Mr Osborne returns to his office on Monday, I hope his judgement isn’t clouded by his camp’s recent loss, but that he is thinking about how he can restore the health of the UK economy by protecting the property market and prevent a future ‘Blexit’.”
The UK and London property market may be brought to a standstill temporarily
- Simon Barry, Head of New Developments at Harrods Estates
“The vote to Leave is causing the financial instability predicted and past experience suggests that the UK and London property market may be brought to a standstill temporarily. That said, any sharp fall in sterling will be seen by investors from around the world as a buying opportunity, which if followed by a much-needed moderation in prices will kick-start a recovery fuelled by domestic demand – assuming interest rates stabilize quickly. The big unknown is whether London will ultimately retain its status as a world financial and business capital outside the EU – we hope so and assume prices and confidence will recover from any set-back.”
Within a short period of time London property, which is now even cheaper in US$ terms after this result, will be viewed as a safe haven by investors
- Andrew Monteath of D&G Asset Management
“Ever since the build-up to the general election campaign last year, political uncertainty has dogged the UK and slowly weakened sterling against the US$.
“We think that the ‘in / out’ circus will spread to other countries across Europe over the next two years. Within a short period of time London property, which is now even cheaper in US$ terms after this result, will be viewed as a safe haven by investors.”
There was no reason to “Leave”… but one ought to embrace change and not fear it
- Vic Chhabria, Rescorp
“Whilst “Leave” was a looming threat, I don’t think anyone actually thought that we would, given the recent rallying of the Financial Markets & Sterling. Even the bookies got it all wrong and sentimentally, I do feel a bit of a void as I am sure many of you do too.
“The fact is that the UK was already eating from an a la carte menu in Brussels. She had retained an independent currency; set her own interest rates and defined monetary policy; negotiated more concessions than practically any other member state; paid much less into the European membership pot on a per capita basis than other wealthy country such as Germany or France; was not a signatory to allowing the European Court of Justice override British law on the charter of human rights, although had ceded many other judicial powers to Brussels; and retained the ability of passport control at its own borders. We didn’t have a good deal, we had a great one! There was no reason to “Leave” and ironically, the vast majority of 18 – 49 year olds with their future ahead of them voted “Remain” whilst the majority of 50+ voted “Leave” with their working life behind them.
“Empty vessels make the most noise and there is no doubt that baseless statements and comments will emerge from the media.
“However, one ought to embrace change and not fear it. After all, it is us, the UK electorate who have made this decision. The reality which I am sure will reveal itself, is that in the long term we will be better off. The FTSE and Sterling have both bounced back from their intra-day lows and will probably remain at these levels for the next few months. I do believe that we will have a considerable amount of uncertainty until the dust settles, however I don’t believe we will have any drastic ramifications. I dare say, Europe will be weaker as a result of us leaving and this could actually lead to the UK becoming a safe haven.
“The London property market has been sluggish for the past 6 months pending this decision and we now have a level of clarity. London to the UK was, is and will remain what Monte Carlo is to France. Smart money is and will continue to find it ways into London and as in every historically uncertain period, there is one certainty – the certainty of opportunity!”
Let Britain be great again and ‘fly free’ now that it has been released from the shackles of the European bureaucratic, undemocratic, corrupt regime
- Trevor Abrahmsohn, Managing Director of Glentree Estates
“Hallelujah, the ‘Great British Public’ are not so stupid after all and voted against the aggressive ‘Remain’ tactics designed to bamboozle and bully them into voting for them. Let Britain be great again and ‘fly free’ now that it has been released from the shackles of the European bureaucratic, undemocratic, corrupt regime.
“How desirable is it for ‘Club’ members to be press ganged into compliance, resist being accountable to their Electorate and then be threatened with knee-capping if they want to leave?
“The UK press were the first to ‘blow the whistle’ on the corrupt Blatter regime in FIFA when all the other countries paid homage to him and, as a result, the fiefdom was broken up and sanity prevails…. this same example will apply to Europe. In all probability there will now be a rush for Referendums amongst other European nations and a run on the Euro and perhaps this Neanderthal, inefficient ‘Club’ will be broken up or substantially reformed.
“Many people today would have voted positively in the Referendum for the EEC in 1973 when it was a simple, tariff free, trading block but this outdated model has morphed into a precursor to a Federal Europe which the EU is today and it appears that more Europeans want to leave the EU than want to join.
“David Cameron’s resignation speech today was dignified and appropriate and is the measure of an elegant Prime Minister who has done his best for the country. Only one other post War Prime Minister, Harold Wilson, left by his own accord which is an illustration of this worthy man.
“Whilst there will be currency and stock market turmoil in the short term when the ‘sand’ settles, as it has already this morning, and the way forward is clear with a new Prime Minister, likely to be Boris Johnson, and a new Chancellor, perhaps Michael Gove, Great Britain will start its long climb to even greater heights free of encumbrances.
“We are a great nation and we should never lose confidence in ourselves. We have wrestled our sovereignty back and we should use this privileged status wisely.
“Although it is now thankfully behind us, it should be noted that Germany, not only benefits from the Euro, which is a devalued Deutsche Mark but has encouraged the expanding of Europe, since each new member represents a fresh basket of consumers to buy their exported goods. Had it allowed the ECB to carry out Quantitative Easing at the same time as the UK and the US, the struggling European economies would have been reflated and be growing at a much faster rate. This selfish and stubbornness has meant that, for instance, Spain, Portugal, Italy and Greece, have suffered with 50% youth unemployment which is a scourge on their society and caused them great strife and is generated from the German’s fear of hyperinflation which it suffered in the 20s. This is what I suppose they term ‘European Cooperation’.”
We’ve already had enquiries from interested investors in the States, Europe, Africa and even the Far East, who are seeking long term property investments
- Louisa Brodie, Head of Search and Acquisitions at Banda Property
“Overseas investors will seize the opportunity to buy up housing stock in Prime Central London following Britain’s decision to exit from the European Union, as the City waits with bated breath to see how far the pound falls, predicts Banda Property.
“In the event that the GBP Sterling depreciates by up to 15% – the worst-case scenario predicted by the Treasury – there will be a window of opportunity for overseas investors to buy into the London market with potentially hundreds of thousands of pounds wiped off the price.
“We’ve already had enquiries from interested investors in the States, Europe, Africa and even the Far East, who are seeking long term property investments.
“They aren’t concerned with short term price dips, it’s the currency discounts that interest them. In a weakening global economy, London’s property market is still seen as a safe haven long term.
“Suppressed demand from needs-driven sellers is likely to result in more property coming onto the market over the next few weeks as vendors come to terms with the fact that now is as good a time as any to move home. However, demand from domestic investors is likely to remain subdued until the end of the year, as they sit tight to see how far prices fall, how the wider economy fares and whether interest rates rise before they commit to a purchase.
“Banda Property predicts a temporary fall in capital values of 5% by the end of August, recovering within 12 months.”
We just agreed a £5m deal on the back of Brexit
Nick Ferrier, Director at Jackson-Stops & Staff’s Midhurst
“Despite the uncertainty and tumbling markets today, we agreed an off market sale to a buyer for a property on the market at around £5m this morning. The confirmed Brexit has not put off either party who are keen to press ahead with the deal. The majority of the UK voted to leave and so for many, today’s outcome is the desired one. Viewing requests this weekend and in the week ahead are strong and we have a number of deals underway – no buyers have called in to put their purchases on hold yet today.”
We have seen several dozen new sales agreed this morning, there no longer being a compelling reason to ‘wait and see’
- Jeff Doble, Dexters
“Following months of will we / won’t we, the Referendum is now out of the way and already this morning in London we have seen several dozen new sales agreed, there no longer being a compelling reason to ‘wait and see’.
“After some short-lived hesitation from buyers and investors we expect prices to remain steady and then rise gradually in 2017. We have spoken to literally hundreds of investors, property developers and buyers today and they are overwhelmingly pressing on with their plans.
“Buyers and, in particular, international investors continue to see London as a safe long term investment, with reliable returns from a vibrant letting market. London will no doubt reflect – then realise that property prices aren’t going to change much and nor are the prospects for London property over the coming years. At Dexters, it is business as usual, life and the market will carry on.”
David Cameron stepping down is disappointing but understandable
- Mark Harris, Chief Executive of SPF Private Clients
“In the short term, not a great deal will change. Mortgage availability is good, banks still want to lend and interest rates are at an all-time low. Swaps are falling on the back of the outcome and it’s likely to have put back any interest rate rise further still.
“The remortgage market is likely to continue to be aggressive with some competitive deals to attract borrowers.
“However, when there is uncertainty it affects confidence and people put off making decisions. Those who were thinking about buying property may now decide to leave that decision to say next year, in the hope that property prices will fall in the meantime.
“The luxury end of the housing market is likely to be impacted. Some buyers may try to renegotiate deals that have already been done but on the other hand if sterling looks cheap it may attract more overseas investors.
“What is clear is that we now need to get on with it. David Cameron stepping down is disappointing but understandable and we now have a leadership battle to deal with, after weeks when nothing got done because of the Referendum.”
Brexit will likely have some severe short term consequences on the property market
- Nick Leeming, Chairman at Jackson-Stops & Staff
“Today’s Brexit announcement will likely have some severe short term consequences on the property market as it adjusts to a period of uncertainty. We’ve already seen many would-be sellers put any decision to sell on-hold and now that a Brexit is confirmed we’ll likely see that indecision continue over the coming weeks. Both buyers and sellers will be waiting to see the effects and with the summer holidays now upon us, we can largely expect to have to wait until the new Prime Minister is appointed in October until we start to see any activity return.
“In the prime London markets, which have already been hit heavily by the introduction of the second homes tax, international investment may continue to decline following today’s news. Around the rest of the country however, activity has remained high over the past few weeks, with quality homes in good locations selling well. Many of the reasons to buy and sell are based on need – people move jobs, need to nearer to family or good schools – and these factors will continue to drive the market in the long term. I expect that we’ll see a fairly quiet few weeks over July and August but that once we have clarity on the new Government and how we will be disengaging from the EU, that we’ll see activity return once again.”
Buyers should take delight in this outcome and utilise the fantastic opportunity the coming months should offer
- Tom Dogger, Managing Director of Winkworth Knightsbridge, Chelsea & Belgravia
“Since the outset of the campaign to determine the UK’s future involvement with Europe, which officially began on the 20th February 2016, the repercussions of the uncertainty surrounding the eventual outcome have certainly impacted the prime central London property market.
“We are now pleased that this process has been completed and we thought it useful to portray our predictions as to how the market may perform, in light of the result.
“Although we were already experiencing stagnation in the sales market, resulting from increased SDLT and the new tax requirements that are applied to overseas purchasers, the ‘Vote to Leave’ presents an interesting conundrum. Although ‘Remain’ was promoted as the safe option by business leaders, the Prime Minister and the Bank of England, many others felt that the UK should remove itself from the regulation and operating costs associated with Europe. However, we suspect The City of London had not predicted this outcome and we expect to see volatility in the financial markets. Having spoken with our registered Applicants leading up to the result, many had decided to put their searches on hold and intimated that they would view a vote to leave as a catalyst to postpone their purchase. However, all may not be lost. This result is likely to see the pound weaken over the coming months, making the cost of property much cheaper, for those based overseas. In addition, the ramifications of the UK leaving Europe is sure to cause deep division within the member states, making a break up in the medium term more difficult to avoid. As has been proven time and time again, London property is viewed as a safe haven in times of stress. This fact, combined with a weak currency might just be the stimulus required to counterbalance the recent dramatic slowdown in interest from foreign buyers, primarily caused by the changes to SDLT. Nevertheless, with a weak pound and less economic stability, interest rates could begin to rise, increasing borrowing costs for organic Purchasers, which would affect both the Prime Central and nationwide property markets.
“It is important that sellers continue to understand that Buyers will carry on seeking value to compensate them for high purchasing costs. Many will continue to demand detailed comparable evidence, to substantiate that they are making a prudent acquisition. We expect to see a steady rise in flats and houses coming available to purchase, thus increasing choice and providing applicants with a wider platform to negotiate terms.
“With regard to the Lettings market, we have been observing a more diverse Tenant, typically happy to consider multiple locations, with less focus on the importance of living in a prime postcode and increasingly wanting value for money. With a vote to leave, we anticipate many of our existing Tenancies to opt to renew on a rolling basis, thus allowing flexibility in the event they wish to depart London at short notice. In addition, many of our Corporate Applicants have been wanting to determine the outcome of the referendum to factor job security. We had seen an increase in registrations leading up to the result and had hoped to begin servicing these Parties over the coming weeks. However, with many of our Tenants being originally based overseas and working for global companies, we expect an initial exodus from London and corresponding job losses. In an environment where there are already high levels of stock availability, from some Sellers becoming reluctant Landlords due to a slow sales market; Landlords must now consider presentation, accurate asking prices and flexibility on occupation terms, to achieve a rental. We suspect that conditions will become more difficult over the course of 2016, with an increase in supply and a decrease in Tenants, promoting excellent conditions for the renter but, a difficult atmosphere for our Landlords.
“In summary for the sales market, buyers should take delight in this outcome and utilise the fantastic opportunity the coming months should offer. Vendors are being more realistic and in many cases happy to contribute towards onerous SDLT, via lower asking prices and corresponding flexibility on the eventual sale price. This combined with a longer term stable economic outlook once the renegotiations with the EU and world markets are complete, makes the prospect of ownership of property in the golden postcodes of London certainly more attractive
“As a final note, we believe that some comfort should be taken in David Cameron’s decision to resign as Prime Minister in due course, thus allowing an opportunity for a cross party team representing the interests of the entire country, to negotiate the best possible terms relating to on-going trade with the EU.”
The UK and particularly London property markets should return to some form of normality, whatever that means now, after an initial period of indecision.
- Jeremy Leaf, a former RICS chairman and north London estate agent
“We’re now in unknown territory. Both local and foreign-based customers have told us over the past few months that, until the value of sterling stabilises, decision-making will pause. A prolonged fall in sterling may encourage some opportunistic foreign investors and/or owner occupiers to take advantage of market softening but overall most will wait to see how far house prices fall, as well as the implications for lending and employment, before taking the plunge.
“In the medium to longer term, the underlying strength of our economy will drive activity and investment. The UK and particularly London property markets are long-established and sophisticated so have always attracted investment and should return to some form of normality, whatever that means now, after an initial period of indecision.
“Increased demand in the rental market is likely to be the immediate outcome which is unlikely to be matched by supply initially, so rents will rise. On the other hand, lettings activity will help the property market overall to stabilise as investors seek to generate yield even if short-term capital growth is uncertain.
“It’s now up to the politicians to keep the changeover and time for reflection as short as possible although we may anticipate waiting up to two years before more major economic decisions are taken.”
There may be a period of stagnation in parts of the residential property market
- Gary Murphy, Head of Residential Auctions at Allsop
“Due to the prevailing sense of uncertainty, there may be a period of stagnation in parts of the residential property market. It may take some time for buyers and sellers in different sectors to identify a new equilibrium at different times. For example, I suspect that trade in the auction rooms will continue as normal, as demand there is predominantly domestic. The central London, new build residential market, which is already fragile due to diminished overseas demand and oversupply, is likely to be more heavily impacted. But, as always, there will be those investors who see any price falls as a buying opportunity and play the waiting game.”
An unfortunate result
- Andy Portlock, CEO at Hadley Property Group
“This is an unfortunate result, and not one which the property industry wanted to have to deal with. It was hoped that the closing of the polls would lead to an end of the recent uncertainty in the market, but this result will just lead to more of the same while the industry waits for the dust to settle.”
There is still plenty of pent-up demand in the UK housing market and a leave vote doesn’t change that overnight
- David Brown, CEO of Marsh & Parsons
“Whatever result you were hoping for on a personal level, it’s hard to argue against the fact that this result will bring further uncertainty and also creates far more questions than it answers in terms of what happens next as Britain extricates itself from the continent in terms of procedures and processes. It’s also worth noting that if the pound weakens against the euro as some have predicted, then it could lead to a significant increase in overseas property purchases – not bad news in itself, but unlikely to have been among the intentions of many ‘leave’ voters.
“On the plus side, it makes the picture clearer for any individuals who were sitting on their hands, waiting on the outcome of the result to make their move. It’s also worth putting things into a wider perspective. Irregardless of the referendum result, there is still plenty of pent-up demand in the UK housing market and a leave vote doesn’t change that overnight. When you think back to before the financial crisis and the volume of transactions we were witnessing on an annual basis, there’s clearly scope for further improvement. The decision to leave doesn’t alter the fact that plenty of people have to and still want to move.”
An historic event and we should embrace this whole heartedly
- Robin Paterson, Joint Chairman & CEO of United Kingdom Sotheby’s International Realty
“The UK’s decision to leave the EU is an historic event and we should embrace this whole heartedly. This opens new opportunities for investment, we may have fewer European investors in the coming months but we believe there will be significant inward investment from Asia, as well as from the US. Buyers from these regions will undoubtedly be looking to snap up bricks and mortar in the UK with the predicted fall in sterling. Regardless of Brexit, the peak of the market is behind us, both in the residential and commercial sector, and these changes will hopefully create a split market across the capital. Areas which are more reliant on EU buyers such as South Kensington and Angel may well see a price correction whilst others favoured by non-EU buyers will perform well. These price corrections are crucial to create churn in the market at all levels”.
Housing market professionals need to brace themselves for a ‘new norm’ in market dynamics, underpinned by the ongoing unknowns
- Ian Westerling, MD of Humberts
“The choice by the British public to leave EU will now be followed by lengthy negotiations as politicians thrash out what post-Europe looks like for Britain. This continued uncertainty is likely to keep the brakes on the property market for the foreseeable future. The ‘must movers’ will still move in line with their personal circumstances – upsizing, downsizing or moving for schools. In contrast, many investors and less committed buyers are likely to sit tight to see the economic and social impact of today’s announcement. Housing market professionals will need to brace themselves for a ‘new norm’ in market dynamics, underpinned by the ongoing unknowns. The ‘wait and see’ period could lead to some price adjustments; the onus will be on the Government to act swiftly to avoid the property market becoming paralysed which would have a knock-on impact on the rest of the economy.”
This is going to cause a huge amount of disruption to the markets
- Andy Martin, Penior Partner at Strutt & Parker
“I am personally disappointed because I do not think there has been a case made to say what it means in terms of the governance, the running of the country and the changes in the legislation we would want to see. It is going to cause a huge amount of disruption to the markets while everybody takes stock of what it actually means and the government starts giving us clear policy direction. Before then we are going to have volatility, which is a risky thing to have in these markets because economic performance is still not something that is a given.
“As a firm, we are market driven. The market has shown signs of volatility in the lead up to this vote. We have seen a real cutback in trading due to the uncertainty of this vote. What we are now waiting to see is how our clients and markets will react to this. I suspect that they will continue to tread with caution until they can see the outcome. We have already seen in the currency markets that this is the case, with sterling being marked down. Everybody will say that makes the UK cheaper but, at the same time, instability affects the confidence of markets. I suspect this will be the overriding factor for the next period.”
Demand for prime London property rests on a wide range of drivers – most of which are unaffected by the referendum decision
- Liam Bailey, Global Head of Research at Knight Frank
“Sales activity and price growth in the prime London residential market have both slowed since mid-2014. The EU referendum has been only one of a number of headwinds which have impacted the market.
“The UK election, the threat of a Mansion Tax, the imposition of higher rates of stamp duty as well as the additional rate for investors and second home buyers, have all conspired with the EU vote to dampen market sentiment.
“The very strong volume of sales seen at the end of Q1, bolstered by the impending additional rate of stamp duty, was bound to weigh on deal levels in Q2, but it is fair to speculate that at least part of the decline since April has related to market uncertainty caused by the referendum.
“There is no doubt that the vote in favour of Brexit will generate a period of renewed uncertainty in the prime London residential market. Some demand, especially from investors, will be delayed and in some cases redirected to other markets – although the significance of these trends should not be overstated.
“Demand for prime London property rests on a wide range of drivers – most of which are unaffected by the referendum decision: the scale of London’s business cluster, depth of skills, education, lifestyle and language. It is not easy to identify an obvious alternative destination for investors despite short-term nervousness.
“On the eve of the vote the pound sat 14% below its mid-2014 peak meaning pricing in the prime market was more attractive for dollar buyers. While a further weakening of the pound could increase inward investment, this impact will be constrained by the fact that around 80% of central London buyers are UK residents.
“It seems a reasonable assumption to make that interest rates will be lower for longer, despite the risk of imported inflation from a weaker pound. While the long-term benefit of ultra-low interest rates on the housing market may be questionable, in the short- term they will act to underpin demand especially for equity rich buyers with access to the best funding rates.
“The prime country house market will be similarly impacted by the result. However while the market has performed relatively well over recent years, following a slow recovery immediately after the financial crisis, prices have not tracked London to date and there is scope for some out- performance in the short to medium term.
“While we are entering a period of renewed uncertainty in the UK and London market, ongoing issues around EU and especially Eurozone stability, which will be highlighted in the run up to French and German elections, are likely to counter this risk and shore-up London’s safe- haven appeal.”
I believe that any price fall will be limited and suggestions of a crash are overstated
- Edward Heaton, founder & Managing Director of Heaton & Partners
“Regardless of individual sentiment about the outcome, there is no doubt that there will be international buyers who may initially give the London market a wide berth. This could be short lived if the pound drops dramatically, as London will suddenly look much better value to foreign buyers. There is a risk that with a period of uncertainty ahead of us, prices may drop off, but I believe that any fall will be limited and suggestions of a crash are overstated. The effect is most likely to be felt in London and the South East.”
In the short to medium-term, the fundamental demand and supply dynamics in the market are unlikely to change
- Grainne Gilmore, Head of UK Residential Research at Knight Frank
“The UK vote in favour of Brexit has the potential to make a relatively swift impact on the housing market. The scale of this effect, especially in the medium to long-term, will depend on the outcome of negotiations on the UK’s exit.
In the short-term, consumer confidence is likely to be knocked by the continued uncertainty, especially with regards to trade. This may weigh on activity in the market, especially those making discretionary purchases, which could result in a slip in transaction volumes, and prices. However, uncertainty could also result in a further dampening of homes coming onto the market, and this lack of supply will provide a floor under prices.
“There is also a chance that mortgage rates become detached from the base rate. While the base rate may well be cut in the coming weeks, lenders may raise their rates as a technique to control their lending levels. Both the reduced availability and increased cost of credit could put additional pressure on transactions as well as affordability. However, it is worth noting that much mortgage activity recently has been in fixed- term fixed-rate deals, ranging from 2 to 10 years. Borrowers on such deals will not be affected by rising mortgage rates over these time frames.
“In the longer term, any increase in inflation could trigger base rate rises, which would again translate into higher mortgage rates. This scenario would be more challenging for those on variable rate deals. If house prices are also declining, this will put the most pressure on highly leveraged borrowers.
“The second-round effects from a slowing economy and growing unemployment will also be felt in the housing market, as these factors affect household incomes as well as sentiment.
“In the short to medium-term, the fundamental demand and supply dynamics in the market are unlikely to change, with a continued structural undersupply of homes across the country, underpinning pricing in some of the most desirable and best connected areas.”
In the short term buyers will see the market as being in their favour, and it is arguably the developers and vendors who will now decide where we are heading
- Simon Deen, Director New Homes, Aston Chase
“After two months of the most divisive debate in recent political memory, the British public have proved the bookies wrong yet again, and voted to leave the EU. The truth is that no one is really sure what will happen next. Sterling, which hit a 2016 high only yesterday, could well fall, making London property more attractive to foreign investors who for some time have seen the British government try to ‘tax’ them out of London. Are we better off out? Only time will tell. In the short term buyers will see the market as being in their favour, and it is arguably the developers and vendors who will now decide where we are heading.”
In any scenario there will always be opportunities and those will become clear in the weeks and months ahead
John Forrester, EMEA Chief Executive of Cushman & Wakefield
“The property sector has probably followed the EU referendum more closely than any other industry and has witnessed the impact of the uncertainty and speculation in the run up to the vote.
“While the decision of the UK electorate is now confirmed, a period of further uncertainty is unavoidable as businesses, the financial markets and the political establishment in the UK, Europe and globally come to terms with what this means.
“Clearly the impact of this decision will be felt beyond the UK’s shores as the UK is the EU’s third largest market by population. We are therefore entering a period of unprecedented change as markets and sectors adapt. What is clear is that in any scenario there will always be opportunities and those will become clear in the weeks and months ahead.”
Life goes on and young families will continue to leave London in search of country life
- Ben Horne, Middleton Advisors (Country team)
“Despite the sense that leaving the EU and the time it will take to negotiate our departure will generate uncertainty and create a drag on the property market, in reality life goes on and young families will continue to leave London in search of country life, along with factors like inheritance and debt. Those factors that create ‘churn’ in the market cannot wait for two years (the estimated re-negotiation period) and so it’s likely to return to normal activity levels after a short pause.”
In the short term one of the main certainties is that trading levels are likely to drop off markedly as buyers ‘wait and see’ what happens
- Mark Parkinson, Director, Middleton Advisors (London team)
“I think we can only stick to ‘knowns’ as we are now in uncharted territory. As far as our world is concerned British and non-European buyers’ decisions to buy are unlikely to be massively affected by Brexit in the long term – no-one yet knows how this will affect European buyers.
“In terms of the UK prime housing market, we expect little or no effect on the country market as people tend to take a long term view when buying country houses. The prime London market depends on so many factors it is difficult to make a prediction. In the short term one of the main certainties is that trading levels are likely to drop off markedly as buyers ‘wait and see’ what happens.”
The vote to leave could now see us heading for absolute chaos
- Andrew Langton, Chairman of Aylesford International
“The referendum has divided families similar to the Spanish civil war, exposed a number of duplicitous politicians, caused mayhem amongst bookmakers and desecrated markets.
“Since the Chancellor’s hike in SDLT coming into effect in April 2016, the London residential market has been very quiet and subsequently the indecision caused by the referendum brought it to a virtual standstill in Q1 and Q2 particularly at the higher end.
“So where do we go from here? After the Chancellor has introduced an emergency budget in which he increases income tax, corporation tax, inheritance tax and reduces the defence budget but maintains overseas aid, the vote to leave could now see us heading for absolute chaos.
“We should remember that we continue to have the highest stamp duty rates in Europe to factor into some of our now overpriced properties and within ten months a number of non-doms will be leaving town. This is not a time for the faint hearted.”
We are concerned for the welfare and peace of mind of our 150+ employees
- Anil Varma, Managing Director, HarrisonVarma
“As an employer, we are concerned for the welfare and peace of mind of our 150+ employees comprising 17 nationalities including eight different European countries. It is extremely unhelpful that there has been no clarity or planning for the future. I would urge an early announcement to allow our staff, many of whom have established themselves in London making a home for their families, to plan ahead for their future.
“We are now heading for a long period of huge uncertainty. We do not know how this will affect our buyers – both UK & overseas, or our European employees. We need early decision allowing us to plan our business. When we started our latest development project – Buxmead in The Bishops Avenue, Stamp Duty was 4% and it has now increased to 12% plus an additional 3% for second home owners. This coupled with the changing rules for non-doms and now Brexit means we can never plan ahead as this is a time of major change and will have a long lasting impact on the British economy.”
London is going to retain its attractiveness to wealthy international buyers regardless of this outcome
- Camilla Dell, Managing Partner at Black Brick
“Now that an ‘out’ vote has been cast, we will, no doubt, experience a period of ongoing uncertainty as the UK seeks to agree a way forward with the EU. Sterling may weaken even further, making London property even more attractive to foreign buyers.
“In general terms, London is going to retain its attractiveness to wealthy international buyers regardless of this outcome; its cultural attractions, geographic location, legal system, and concentration of talent mean that there will always be demand for Prime Central London property.”
In one year’s time, we will not reminisce about the nostalgic days of the EU
- James Bailey, Chief Executive of Henry & James
“I am delighted with the vote to leave the EU. My heart said remain for stability, but my head persuaded me to vote out. I firmly believe that the British public’s decision will strengthen the UK economy going forwards. There may be some instability in the short-term, but like a divorce, there is always a rough patch.
“What does this mean for the London property market? If the weakening of the pound continues, investors from aboard will return to our shores. We have the fifth largest economy in the world. Buyers want to invest in booming Britain and that is not going to change overnight.
“In one year’s time, we will not reminisce about the nostalgic days of the EU. It’s just not going to happen. Now it is time to set a clear direction for the country, the economy and the British public. Let’s make Britain great again.”
Our exit from the EU will stop the continual flow of red tape and see our housing market grow and flourish
- John Elliott, Managing Director of Millwood Designer Homes
“I am delighted that today is ‘Independence Day’ for Britain, as the majority of the country has decided that a departure from the EU is best for our future. I am excited to get on with the New World and see the back of EU laws which have been detrimental to us for over 40 years.
“One of the UK’s biggest assets is our home grown housing market and this will now be much better off out of EU regulation.
“For many years, the EU Habitats Directive has had an unnecessary impact on housebuilding. The mere hint of great crested newts or slow worms on a site, which unlike in Northern Europe where they are rare and given special protection, are prolific in the South East of England can delay building for months as they have to be “translocated” and caught and taken somewhere else for release.
“’Special Protection Areas’ were another misguided EU directive, which in the case of Ashdown Forest in East Sussex, has resulted in a 7km zone where building can only take place if would-be builders provide SANGS (Suitable Alternative Natural Green Spaces). However, according to conservationists, this is detrimental to the Forest as it will destroy the flora and fauna.
“Most recently the EU’s Mortgage Credit Directive effectively means that no housebuilders are able to lend money to buyers unless they register as a regulated Financial Adviser. When times are difficult, this has been a traditional way for housebuilders to help buyers overcome mortgage down-valuations and other issues, and keep the market moving.
“Our exit from the EU will stop the continual flow of red tape and see our housing market grow and flourish without unnecessary constraints placed on building much needed new homes; working towards creating a better future for Britain.”
The practicalities of a separation may take years to implement which could leave the market in a limbo state
- Islay Robinson, Chief Executive Officer at Enness Private Clients
“Now that Britain has voted to leave the EU, we will have to wait and see how long negotiations take, to see what the real outcome will be for the property market. The practicalities of a separation may take years to implement which could leave the market in a limbo state and foreign investors are likely to continue to hold off to see how the UK performs on its own. Those market participants who were waiting for the outcome may continue to stall until the picture is clearer. Prices will depend on how supply is affected by falling foreign investment and continuing domestic demand. Will homes continue to be built at the current rate? Potentially the greatest impact here will be on the London market. With just under 50% of central London investors being foreign, we’d expect prices to flatten in the short-to-medium term. On the other hand, if sterling plummets dramatically, the UK market will become far cheaper for foreign investors, making it a more attractive prospect – although investors will have to weigh this against London’s potential loss of status and as a politically stable economic hub. How interest rate increases are handled may also be slightly different now.”
Demand for London residential property will not entirely depend on the country’s macro-economic position
- Andrew F. Reeves, Managing Director of Andrew Reeves
“Now that Britain has decided to leave the EU, buyers who really do need to move – for work or family reasons – and have been waiting for the EU decision, will re-emerge and begin their searches. Non-urgent buyers will be less enthusiastic, instead waiting to see if house prices ‘soften’ further, and this may well continue throughout the rest of 2016. Thereafter, the rate of recovery – of demand and property values – will be influenced somewhat by the mood in the country. This will be led by the announcements, intentions, and even the ‘body language’ of our political leaders. Will the tone be set by a gloomy David Cameron, a buoyant Boris Johnson, or a ‘vanilla’ A.N. Other? Hopefully they will give us some idea of the speed with which the UK can, and will, be set on the road to new prosperity outside the EU.
“Some ‘Remain’ campaigners were predicting the UK’s economic recovery from Brexit could take five or even ten years. However, demand for London residential property will not entirely depend on the country’s macro-economic position; the world’s most popular capital city will always enjoy huge global appeal – and demand for property in London will continue to outstrip supply, for the foreseeable future.
“Decisions by international banks and multi-national companies in the City on whether to stay put or move out of the UK may have some influence on both property sales, and on rental demand from corporate tenants.”
Britain’s place in the European Union should not affect the appeal of London to people from around the world
- Jake Russell, Director at Russell Simpson
“An exit from the European Union can be thought better of as a disturbance and distraction to the London property market, rather than a disaster to it. London has historically been one of the most prestigious, leading cities of the world, and Britain’s place in the European Union should not affect the appeal of London to people from around the world.
“We would, however, see the value of the Pound fall, which would make London property more attractive to overseas purchasers with strong currencies. We expect this will precipitate a temporary spike in foreign investment into the UK, as investors take the opportunity to acquire property at a reduced cost. Following this initial spike, I feel that the market is not likely to improve hugely in the immediate future, as it is still somewhat depressed by, among other factors, the change in Stamp Duty Land Tax, though possible economic growth outside of the European Union following our exit would of course mean a bright future.”
Both domestic and foreign buyers will continue to wait and see how far prices can or do fall
- Martin Bikhit, Managing Director of Kay & Co
“A vote for Brexit will immediately see the value of Sterling fall. This will, in turn, create a spike in demand as London property will be more attractive to opportunistic investors who will take advantage of the bigger spending power, but it is the wrong sort of demand that will ebb away as prices fall. Normally, the falling prices should spur the market into action, however, I can see that both domestic and foreign buyers will continue to wait and see how far prices can or do fall, to make the most of their money.
“When considering the wider economy, we can see that a fall in London house prices caused by a Brexit in the long run may not benefit many domestic buyers; for example if a Brexit causes (as predicted by many) wide-ranging job losses and a general slowdown in the economy.
“Further instability within the London property market, as always, will not benefit either vendors or buyers, though if interest rates are slashed then mortgages will be easier to obtain. Of course, we have to continue to balance this benefit with the wider detriment a Brexit would have on the whole.”
The rule book will be re-written on asset prices in the UK
- Alex Newall, Managing Director of Hanover Private Office
“The world is taking stock and there is a clear need for calm as the markets are hugely volatile because the ‘reset’ button has been pressed. The fact that the Governor of the Bank of England has offered £250 billion for additional liquidity is a sign that he is concerned. The GBP has fallen to its lowest level since 1985. All necessary steps will be taken by the Bank of England to ensure monetary stability, which could mean a drop in interest rates by 0.25%..
“Looking at the underlying economics, Britain is a market with an affluent customer base and a highly educated and talented pool for employment. We have a set of basic needs and investors will hunt out companies with a good yield track record come good times or bad; this goes for property too. The world’s global firms will want to be part of the UK and to do business with it. As the markets level out and return for regular trading, property transactions will find a suitable price level; maybe higher on the back of a weak pound, low interest rates and more finance on offer from the Bank of England. Maybe lower as liquidity is less. Investor will seek out quality and location. With the right tax and acquisition structures, we now see this market as a huge buying opportunity for investors with the ability to hold for the medium to long term.”
Prime Central London property is probably most exposed to any future Brexit impacts
- Naomi Heaton, Chief Executive of London Central Portfolio
“Prime Central London real estate is expected to benefit from a flight to quality and the security of blue-chip tangible assets, against a background of highly volatile financial markets.
“It is now likely that property prices in Prime Central London will increase. Whilst LCP had originally predicted that this would not occur until 2017, the signs are that the re-entry of investors into the market will be more rapid than originally expected. LCP have received a stream of enquiries from the early hours of this morning.
“In light of the anticipated appetite, particularly from foreign investors, LCP has decided to make a second share offering available for its quoted property company, London Central Apartments III, which exclusively invests in the private rented sector in Prime Central London”
We expect more interest and volumes from overseas buyers
- Charles Curran, Principal of Maskells
“The market has been filled with uncertainty over the past couple of years and now that we have voted to leave, this draws a line under a major obstacle in getting the Prime and Prime Central London market back on its feet. There is no doubt that the slowdown in the market prior to the Referendum was as a result of the Chancellor’s ill-conceived increase in Stamp Duty, and as such we do not expect to see an increase in prices. We expect the domestic buyers to remain subdued, perhaps opting for rental accommodation (rents being low for the time being due to oversupply and high cost of acquisition), but we do we expect more interest and volumes from overseas buyers. An unwanted consequence of leaving the EU is that our currency will depreciate, making property cheaper in net terms compensating for the high SDLT in Prime and Prime Central London. Why would they want to buy here? For the same reasons they always have – London is the greatest city in the world to live in – and we are not biased!”
The decision to leave is truly a once-in-a-lifetime decision and should now be embraced
- Graham Davidson, Managing Director of Sequre Property Investment
“The decision to leave is truly a once-in-a-lifetime decision and should now be embraced. The UK economy is going from strength to strength and the people of the UK have decided that now is the time for us to break away from the rest of Europe and gain back more control on our own future. Our economy continues to develop, particularly outside of London in light of the Northern Powerhouse agenda which is key to growth. Investment in Manchester over the past 12 months for example has been unprecedented and this month it was announced that MediaCityUK is set to double in size, with investment from UK companies creating thousands of new homes and job opportunities – a show of confidence in what we can achieve on our own. It’s safe to say The Northern Powerhouse agenda is well underway, and the referendum results being announced in Manchester’s town hall was testament to this.
“The reasons for investing in UK property won’t change, with returns still outperforming all other forms of investment. Our own business is testament to this – enquiry levels have not declined despite what much of the media has portrayed; people understand that property investment can be highly rewarding, whether you are topping up your pension, saving for your children’s future or looking for additional regular income.”
The end result could be a two-speed London property market… with stagnation across the West, North and East London sectors of the market
- Peter Wetherell, Chief Executive of Wetherell
“Now that voters decided that the UK is to leave the EU we are seeing massive shock and turmoil across all markets. The political establishment who wanted to remain are in Shock; Boris Johnson and Nigel Farage have shown that they have the support of the majority of English people and the City and financial markets will have to adjust to a “new normal”.
“David Cameron will need to think about his future, and this gives both Boris Johnson and Nigel Farage an opportunity to say they have their finger on the pulse of what the English are thinking.”
“This descision to leave has opened up a Pandora’s Box as far as the London property market is concerned. This (Friday) morning already Sterling has plummeted to a low not seen since 1985 and this will now create a short-term buying opportunity for US dollar and Euro based property investors. For overseas buyers, this big and dramatic drop in the value of Sterling will effectively offset the Stamp Duty and tax adjustments and it will make Prime London property a lucrative investment for overseas investors bold enough to take a punt despite the market uncertainty.”
“This is a market for risk takers and people able to spot high risk, but potentially lucrative opportunities that have emerged overnight due to the fluxes in the markets. Dollar based Middle East and Asian investors in particular will now wake up this morning and look at short-term buying opportunities in the Central London property market and look at acquiring residential property priced up to £6 million. Already this morning ive had so many enquiries from clients about the implications for the London property market and I expect my phone to be extremely active today from my clients from both the UK and overseas about whats happened.”
“The Prime Minister, Chancellor and Governor of the Bank of England will now need to act boldly and decisively to stop this exit from the EU from potentially leading to a ‘two-speed’ London property market. Now that UK will not be part of the EU in the future then industry construction costs could rise by up to 15% since currently construction materials imported from and exported to the EU are free of duty and taxes. Many site/construction staff working in London are people who originate from countries across the EU the future of all of this will need to be looked at quickly and decisively.
“London’s status as the financial capital of Europe could be under threat due to Brexit. Currently London is able to provide financial services to the EU; the future of all of this could now be put into question as the UK leaves the EU. Currently some 39% of London’s population of 8.66 million people were not born in the UK. For Mayfair and the West End, some 55% of the market is based on non-EU overseas buyers who are from the Middle East, India, Russia and Africa. The West End is far less reliant on the EU, so it will continue, maybe at a lower volume or maybe at a higher volume; dependent on volatility in local political markets around the world.
“However in West London and Inner North London where there are high levels of EU buyers there could now be a dramatic slowdown which could last for a number of years. The more commercial property dominated markets of the City of London and Canary Wharf/Docklands could be really damaged by this exit from the EU, with a flight of capital, companies, jobs and workers.
“These issues in West and East London might be a short term problem or a long term issue; dependent on the strength of the financial markets in the City of London to continue and cement the City as the financial centre of the world.
“The end result of this descision to exit the EU could be a two-speed London property market – with just the core West End, and the periphery (homes priced below £400,000) continuing to operate; but with stagnation across the West, North and East London sectors of the market.
“In order to protect the long term interests of the London property market the Prime Minister and Chancellor will urgently need to review StampDutyLT adjustments and also seriously consider reversals of the various tax changes that have already challenged the central london market over the last few years.
“Since the vote is out and with tumoil this morning in the international markets a far weaker pound it would hardly be fair of the Chancellor not to make a level playing field for the local London market – he will need to act boldy to make adjustments to penal transactional charges – after all greater volume of sales at a lower tax rate makes the government more money.
“Now that Brexit is the new reality if the PM, chancellor and government do not intervene to support the property sector then we will see the nightmare scenario of a two speed market.
“I think of the success of London over the last 8 years – after the banking crash of 2008 Central London developers sought out overseas investment to plug the development finance hole when the banks withdrew debt – shows just how robust and agile the London property market is when faced with major challenges. After the last global recession overseas investors and London’s developers worked together and should be applauded for finding the resources to continue developments and the success of London. So since its been done once before, I have every confidence that the London property market is strong, robust and able to rise to challenges.”
At the end of the day, bricks and mortar will always be a good investment option in the UK
- Martin Robinson, Director of Sales at Hunters Property Group
“The impact Brexit will have on the UK property market will be difficult to determine until the negotiations between the UK and EU are finalised. We expect some clients to pause to familiarise themselves with this news, but in the past we have found the UK property market has been very resilient against changes in legislation. At the end of the day, bricks and mortar will always be a good investment option in the UK.”
The UK property market is incredibly resilient and investment in housing will remain a cornerstone of our market, whether we are a part of Europe or not
- Martin Walshe, Head of Residential at Cheffins
“Now is the time to stop procrastinating, we know we are leaving the EU and our property market will soon return to its former strength. Both buyers and vendors waited with bated breath to hear the Referendum result, and now that we know we are leaving the EU, those who have sat on the fence will be returning to the market in their droves. Whilst we will probably experience a short period of adjustment, the UK property market is incredibly resilient and investment in housing will remain a cornerstone of our market, whether we are a part of Europe or not. Despite 2016 being the year of the Referendum, we have recently seen the best market ever experienced, and a Brexit will not affect this. Cambridge in particular will continue to be an international center for innovation and education, and our booming market will return to its former strength. Residential markets have always been influenced by uncertainty and we are now entering an economic climate which has never been experienced before, so the only strategy is be back to business as usual and brace ourselves for the busy period which is to come.”
This could be the final nail in the coffin for the Prime Central London market
- Russell Quirk, CEO of eMoov
“We don’t anticipate any tangible difference where the UK property market is concerned and the supply and demand balance that is currently dangerously out of kilter will see little sign of stabilising itself.
“Going forward the UK market will go from strength to strength, perhaps with wobbly knees at it emerges from the clutches of the EU, but it will soon find its feet again.”
“Many will be running to their nuclear bunkers now that the apparent end of the world is nigh. But before they do, they might want to take a breath and sit tight. We’ve voted to leave the EU and regardless of personal views we must respect the democratic position of the populous.
“We don’t anticipate any tangible difference where the UK property market is concerned and the supply and demand balance that is currently dangerously out of kilter will see little sign of stabilising itself.
“Going forward the UK market will go from strength to strength, perhaps with wobbly knees at it emerges from the clutches of the EU, but it will soon find its feet again.
“There may be many buy-to-let landlords and second homeowners rushing to list their property for sale in order to maximise their profit, before the “Armageddon” on the horizon destabilises the pound. Ironically it will be these people flooding the market with additional stock that may see prices cool ever so slightly.
“However, property values increased by 6% over the course of 2015 and we predict the same rate of growth by the end of 2016.
“Homeownership will remain far out of reach for the average UK citizen and the overwhelming swell of demand for property will remain despite our choice to leave the EU.
“This could, however, be the final nail in the coffin for the Prime Central London market, as the capital’s high-end properties have never been less desirable in the eyes of foreign investors. With demand having slumped to record lows over the last year, it’s not looking good for the capital’s property elite.”
The speed and substance of its new trade agreements with the EU and other European states will ultimately define what impact this decision will have
- Karl Zeller, Executive Partner at Berlin-based real estate agent Bewocon
“First of all we must now wait and see how the UK aligns and positions itself following the impending Brexit. The speed and substance of its new trade agreements with the EU and other European states will ultimately define what impact this decision will have.
“From our standpoint, we expect to see an increased demand from overseas investors in Berlin property, who will be looking to avoid the UK during what will be a very uncertain period and invest in a secure and stable market elsewhere. With Germany currently the fourth largest economy in the world and the Berlin market offering strong returns, as well as a growing number of high-end developments in the pipeline, we could see a huge shift in power from the UK property market to Germany.”
Those who are looking to purchase a holiday home overseas, after an initial hiatus, are likely to see that owning a property in the EU will only be marginally more complex than it is currently
- Andy Bridge, Managing Director of A Place in the Sun
“The announcement this morning that the public have voted to leave the EU comes as a shock to the UK and leads to a level of uncertainty for the overseas property market.
“An estimated 1.3 million Brits currently live in the EU and the effect of this result will cause immediate concern as people wait to see what changes arise as a result of the vote. The UK will now officially inform Brussels they intend to leave the European Union followed by a two-year period where the terms of our new status will be set out. The status of Brits living within the EU will be high on the agenda, as will the status of EU nationals who currently live in Britain.
“Those who are looking to purchase a holiday home overseas, after an initial hiatus, are likely to see that owning a property in the EU will only be marginally more complex than it is currently. Residents of the US, Canada, Russia and many other nationalities own properties throughout Europe, so while it may become slightly more complex for Brits, clearly we are not going to be prevented from owning property in Europe.
“Recent research by A Place in the Sun found that nearly half (48%) of those currently considering a purchase abroad would continue with their search if we were to leave the EU. It is expected that this number will be much higher after the first few months and Brits reignite their desire to own a property overseas.”
Whilst London has again become an instant target for dollar buyers, uncertainty will mean it loses some of its attractiveness
- Camille Letuve, Partner at Athena Advisers
“For international investors, whilst London has again become an instant target for dollar buyers, uncertainty will mean it loses some of its attractiveness. Any devaluation of sterling, normally considered a safe haven, is going to encourage some foreign investors to turn away from London in favour of other capital cities such as Paris, Lisbon or Madrid.
“In Paris, higher international demand will increase real estate prices in the years to come, providing good prospects for capital gains. This will be fuelled by low interest rates for non-resident investors.
“The movement of currencies on the euro, such as the dollar will only fuel this even more. US buyers and those from dollar-pegged countries have become almost 4% better off on European property overnight and are now 24% better off than they were this time two years ago.
“In Lisbon, flexible real estate-led residency programmes like the Golden Visa scheme will continue to attract non-EU investors. And for investors from inside the EU, they will continue to utilise Portugal’s tax-efficient non-habitual residence scheme with no wealth tax and low income tax.
“Aside from currency, tax is the issue that most worries our British investors targeting property across the channel.
“Until the UK is officially separated from the EU, British property owners in France are subject to rental income tax of 20% and capital gains of 19%. For owners outside the EU France demands 33% on capital gains. British have always been one of the biggest buyers of French property, so it remains to be seen if British owners will receive special consideration.
“We expect lengthy bilateral negotiations in order to define the new tax rules imposed on British owners in France. In this time, transactions from those in the UK are likely to drop, but will be sustained by mortgage rates.
“Whilst the British would be most affected by a possible exit of Britain from the European Union, the domestic market in France will not be immune. Notaries, real estate agencies and ultimately tax revenues will also see change.
“Similar to the subprime crisis back in 2008, the most affected areas in France will be those that are most popular with the British: the Alps and the South of France.
“Just as we saw after the 2008 sub-prime crisis, cities primed for capital gains will once again be heavily targeted. Lisbon falls into this category, with prime central property prices at a third of Paris and London. Prime prices in Lisbon have increased 30% since 2013 and this trend is set to continue.”
This is a good result for residential property. It is going to be very busy.
— David Adams (@DavidAdamsEA) June 24, 2016
Just woken up to find the loonies may have taken over the asylum…
— Alan Page (@beachcomberpage) June 24, 2016