Brexit – Get used to uncertainty, this could take some time


On January 17, Theresa May’s speech took us closer to understanding what a post-Brexit Britain may look like. Now, just a week later, the Supreme Court has ruled, by a majority of 8 to 3, that Mrs May’s plans must jump another hurdle before any negotiations can take place. Parliament will have to approve the triggering of the, as yet, untested Article 50.

Ministers insist that there will be no delays to the proposed timescale of starting the process by the end of March, and opinion suggests that the ‘will of the people’, as expressed in last June’s referendum, will prevail, but it’s another indication of how complex the whole process will be. Article 50, starts the unpicking of decades of legislation, deals and agreements. As we get into the detail, things are likely to become more convoluted. We may complain that we have little by way of concrete facts and figures now, but it could be some time before we gain complete clarity. And crucially, while we remain an EU member, we remain subject to EU law. Once Article 50 is invoked there is a proposed two-year period for negotiations, but all 27 member states must agree and ratify any deals made. With lawyers and politicians from states involved and fighting for their national interest, the process could take years.

We are already heading into unknown territory but, with the Single Market appearing to be inextricably tied to free cross-border movement, it seems the UK’s trading position is due for a bigger upheaval than some would have hoped and in Scotland, Nicola Sturgeon is proposing ‘indyref2’. Meanwhile, the Supreme court have decided that the Scottish Parliament and Welsh and Northern Ireland Assemblies don’t have a say – EU membership is a UK matter.

What does all this mean for property? Well, in truth, things aren’t that much clearer than they were when the referendum result was first announced. We know the general direction of Brexit but little of the detail, and it’s hard to respond when so much is still to be negotiated.

Business relocation

There are some financial sector businesses threatening relocation to mainland Europe. Ireland is hovering in the wings, waiting to offer a home to businesses thinking of sticking with the freedoms – and restrictions – of the single market. But the UK Government are unlikely to lie down without doing what they can to attract overseas business to the UK.

If there are corporation tax breaks offered – perhaps the most likely tactic in the Government’s armoury –  then any incorporated property rental business should feel the benefit. But, we mustn’t forget that recent policies have sought to control the sector and hitting small-scale landlords, with mortgage debt, in their pockets. Would the Government allow the property rental sector to shift ‘en-masse’ to limited company status? Or would they still attempt to regulate housing provision via the tax system? It’s just too early to tell.

Workforce relocation

Of course, there are other implications than tax for the sector. If businesses relocate, do they take or bring their workforce with them? Does this provide more opportunities for a renting to a possibly more transient workforce? Most people moving to a new position are more likely to rent than to buy. A younger workforce, similarly, is more likely to rent. And naturally, if there are significant shifts in employment, then rental values will adjust based upon levels of demand. Perhaps the capital will be most affected by changes to the financial services sector.

What won’t change anytime soon is the shortage of properties in Britain. Even post-Brexit, people want to live and work here. We may face a period of re-adjustment, but that’s normal in any housing market, and as business owners and investors, we need to be able to cope with change.

Until the route of our exit from Europe is fully mapped, we need to keep on getting the basics right and maintain a strong and professional industry voice. That way, when things do start to become clear, we’ll be ready to respond.

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