One of the biggest news stories in recent weeks has been the upcoming “Brexit” referendum in June, which will determine whether or not Britain will leave the EU. There is much uncertainty about what the future will hold for our country if we opt to leave, particularly in the property market, where there are bound to be some significant changes.
It seems that we are likely to see the market slow down in the build-up to the referendum, as investors are usually reluctant to make major purchases at a time of uncertainty. This is an effect we also saw in the period leading up to Scotland’s 2014 independence referendum. Although it is unclear exactly how the property market would be affected in the longer term, it seems obvious that different types of investors would be affected in different ways. Domestic buyers who are purchasing their own homes here in the UK may not see much of an impact, but those who are investing in luxury London properties are likely to be more strongly affected, particularly investors from overseas.
A large proportion of London’s highest-value investment properties are bought by overseas investors. They are seen as safe investments that can be relied on to remain stable or increase in value, allowing investors to evade the economic and financial uncertainties of their home countries. However, a Brexit could change this. It has been widely predicted that the value of UK currency will decrease if it is decided that we will leave the EU, so many investors will quickly sell up instead of waiting for their properties to lose their value or may be deterred from investing altogether.
However, the weaker sterling could conversely attract new overseas investors, as they will be able to get more for their money. London properties will also no longer be subject to financial transactions tax, an EU rule which could have potentially been a factor putting foreign investors off London properties.
There is much ongoing debate about how an EU exit would impact London property investors, but whatever happens, we will always be on hand to provide support, advice and guidance to help our clients deal with the changes. As Sutton’s expert property and block management team, you can rely on us to keep you up to date with all the latest events in the world of London property.