The twelve days before Brexit – a view from X-Press Legal Services…

With just twelve days to go until the Brexit deadline, we hear from X-Press’s Director of Operations, Christian Lister on 12 potential impacts of a ‘no-deal’ Brexit on the UK property sector.

  1. Bank of England

Base rate will continue to hold, however some pundits are predicting they could go minus, focusing savers into more attractive yields. Credit has never been cheaper, but I think that comes with a consumer warning when interest rates rise, and they will.

  1. Finance

Lenders calculations work on a sliding scale of risk. Both Prime and Subprime have adopted similar strategies and ‘have you been furloughed twice’ is today a key qualifying question.  The longer the economy, job security and the gig economy suffer, the more averse lenders become to offering mortgages to buyers with lower incomes and smaller deposits. Unless the banking industry looks towards more Government backed finance initiatives.

  1. Construction

Britain’s withdrawal from the EU runs the risk of dramatically reducing the construction workforce which could severely compromise current plans to build hundreds of thousands of new homes to ease the housing shortage.

  1. Immigration

The UK has for years supported technology and science related jobs and now they need to balance the shortfall in the home-grown skilled trades market.  In recent years many of the UK’s builders, plumbers and construction related labourers have come from the EU. The shift in Government policy will be in line with Germany’s construct policy of the 1990s.

  1. Housing

Currently the UK government cannot live up to its ‘front door for all’ policy without skilled immigration. A reduction in recruiting skilled labour from abroad will have a negative effect on the housing market. The Treasury has long recognised that the housing industry is the first to go ‘over the cliff’ and will need to fund vocational courses for skilled labour as the only option available will be to continue to import much needed skills.

  1. SDLT Holiday

The Treasury’s well executed plan to give the housing sector a much-needed boost in light of the pandemic lockdown was welcomed however, the industries supporting it had not been considered. Lobbying has taken place for the SDLT holiday deadline date of 31st March to be tapered to allow the bottleneck of problem cases and late purchase to be eased. Our suggestion is that any “enacted transaction” in February receives the taper beyond the drop-dead date.

  1. State Aid

The question of how state aid will function outside of the EU legislative framework post Brexit has been something of a political football for some time.  The UK government recently declared position of ‘if there is no-deal, there will be no system put in place beyond the World Trade Organisation requirements,’ with yet another consultation expected to be published. We could be looking at a very US style system of package and repackage of mortgage assets trading as collateral investments or simply sold to a hedge-fund.

  1. Housing Subsidies

Should EU state aid laws no longer apply to the UK from January 1st, there is a possibility that they may be manipulated for housing subsidies.  Loan schemes that could be bundled into Residential Mortgage-Backed Securities maybe a consideration for the Shareholder Executive.

  1. Buying Opportunities

For some, a no-deal Brexit could bring big buying opportunities in the property sector with the potential for lower house prices in certain areas, whilst property remains a key asset for UK investors. HS2 areas, such as Crewe and Birmingham, are prime for property developers, as private money will flood in to take full advantage. We could see Homes in Multiple Occupation (HMO) and second stepper renters use these townships as viable commuter belts.

  1. Mortgage Rates

A potential silver lining for homeowners is mortgage rates staying low for longer.  The added economic uncertainty brought on by a no-deal Brexit would make an early interest rate rise seem unlikely. In the event of negative interest rates, and to deter financial flight from savers, the banks would surely look to introduce a number of incentives to stem the flow.

  1. House Prices

The Centre for Economic and Business Research, a think tank, has predicted a 13.8pc fall in house prices next year.  I completely disagree with CEBR, I fully expect to see single digit growth of around 4%. These alarmist headlines hold zero weight for those within the crux of the industry. In reality, people will buy and dispose of property for many reasons. The sheer weight of property demand isn’t driven by locality it’s necessity. We are a nation of home owners.

  1. Property Sector

The economic uncertainty of a no-deal Brexit is likely to hit the commercial property sector.  The recent liquidation of various high-street retailers will of course add to issue but it’s the perfect time for local councils to embrace the relaxation of planning class uses and the change from commercial to residential purposes will be something every property investor has both eyes on.


X-Press North Cheshire, Merseyside and Manchester

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