What Brexit is?
Brexit is the term given to the withdrawal of the United Kingdom from the European Union. In June 2016, 51.9% of participating UK citizens voted to leave the EU after being part of it since 1973. Brexit is set to take effect in March 2019 and is likely to affect everyone in the UK, including companies and individuals who have any connection to the UK. As negotiations are still taking place, we can only predict how this will affect the Property Industry.
Why is it so important?
No other major countries have left the EU since the European Union began. This means that no one is certain what will happen to the UK and the rest of the EU’s economic and trading relationships once Brexit is complete.
Affects on Estate Agencies inside the UK
EU Citizens in the UK
There are around 3.6 million non UK, EU nationals currently living in the UK. With this in mind the UK Prime Minister, Theresa May has made the following statement “EU citizens lawfully living in the UK today will be able to stay”. She also suggested that EU citizens can apply for ‘settled status’ which will cost no more than a UK passport.
However, as all Brexit conditions are not yet clear, EU citizens may deter buying property in the UK until after Brexit when conditions are complete. It could be possible that after Brexit, EU citizens will not buy property in the UK at all if they don’t wish to leave the EU. That being said, it could have the opposite effect. There could be a rise in EU citizens buying property in the UK before Brexit is complete as people fear that the process may not be as easy after March 2019.
UK Estate Agents who operate abroad
Many UK Estate Agents also sell properties outside of the UK. When the UK leave the European Union this could potentially mean that different rules will apply to buying and selling properties abroad. If this affects you, keep up to date with everything, following any Brexit news so that you will be fully aware of any unexpected changes. This will also ensure that you can keep your clients informed of any changes, which will create a strong trusting relationship.
Affects on Estate Agencies outside the UK
As well as affecting EU citizens emigrating the to the UK, Brexit could also affect UK expats considering buying property in EU countries. At present, EU citizens from the UK are able to go to any other EU country, seek work and set up residency. After Brexit, it is unknown if this will still be the case for UK citizens. This could prevent a UK citizen from buying property in the EU until all laws are discussed and finalised. On the other hand, Brexit could encourage more people to gain EU residency before March 2019 incase they are unable to do so after this date.
It’s also possible that a percentage of the 48.1% of participating UK citizens who voted to remain in the EU could consider emigrating to the EU, even more likely if this is something which they had already considered.
Foreign investors are increasingly buying property in the UK, such as Lee Kum Kee, the Hong Kong company who bought London’s Walkie Talkie building in 2017 for £1.3bn. However, it’s uncertain whether this increase is because a Brexit deal is still not finalised, meaning foreign investors are investing while property is ‘cheaper’ for them.
So who does best from Brexit? Any property investors dealing with foreign currency who can hold onto a property for a long time incase there is any political and economic disturbance.
Pound to Euro
The month before the Brexit vote £1.00 would get you €1.31 Euros. After the vote was announced this dropped to a low of €1.08. At present £1.00 would get you €1.13 euros, this means that buying the same priced property after Brexit was announced will be considerably more for a UK citizen. This could result in less property sales due to financial reasons.
Mortgage rates are influenced by the Bank of England and experts were initially wrong about Brexit’s immediate effect on mortgage rates. They predicted that rates would rise after Brexit was announced, but in fact they fell. Since this fall, mortgage companies have seen more people re-mortgaging their property in order to get one of the best available fixed deals before rates start to increase.
The Brexit Timeline
To get a better understanding of what has happened in brexit so far, we have created a Brexit timeline:
18th February 2016 – EU Referendum Announced.
23rd June 2016 – 51.9% of participating UK citizens voted to leave the European Union.
17th January 2017 – Theresa May lays out the Brexit strategy.
13th March 2017 – Parliament votes to trigger Article 50, this is the treaty which states that any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.
29th March 2017 – Article 50 is triggered which gives the UK government two years to negotiate with the rest of the EU any future benefits the UK may still be entitled to once left the European Union.
2018 – Theresa May continues ongoing negotiations with the EU.
March 2019 – Two years after Article 5 is triggered, the UK will leave the European Union.
-If the UK want to rejoin the European Union, they have to apply like any other country.
UK Property Market in 2018
Since the announcement of Brexit in 2016, 2018 is seeing a boom within the UK’s housing market with a surge in property values that rose up to 5.2% according the The Express. This means that house prices are on average £12,000 higher than the same time in 2016, good news for homeowners.
What does all this mean for Estate Agents?
People who bought a home in the second half of 2016 (after Brexit was confirmed) was down by 9% compared to the same period the year before. However, since then there has been a boom in the property market – So is this good or bad?
Fast forward to two years after Brexit was announced and and everyone is still uncertain what will happen to the property market once Brexit comes into full force in March 2019. All experts can do is predict what will happen, and as we have previously seen, predictions can be wrong. So fluctuation on interest rates, property prices and the economy will most likely continue to affect the UK property industry, especially until the split between the UK and the European Union in March 2019.