It’s the word on everyone’s lips: after two and a half years of debate, and months before that leading up to the referendum, it seems we are no clearer what the Brexit future holds in store.
We’ve asked some of the industry’s experts for their views on the subject dominating every news outlet.
But we don’t want them to repeat the same old ‘big picture’ arguments - instead we want to know what Brexit means to the industry? What might it do to the housing market? Does it mean that estate and letting agents (already sceptical of politicians after the Housing Minister merry-go-round) have even less respect for our policy makers after the Brexit rumpus?
We’re keen to get your views too - please leave comments on this story and we have a poll at the bottom asking whether you’re for or against a second referendum.
Many thanks to our contributors and to you for reading this…and here’s to a successful future, whatever happens with Brexit next week and beyond.
Iain McKenzie, chief executive of The Guild of Property Professionals:
The expression self-fulfilling prophecy springs to mind. When you look at the key data in the housing market currently there is no reason or rationale for the downturn that we are experiencing.
Unemployment stands at circa 1.3 million, with 76% employment, and with over 10,000 different mortgage products available lending is still strong. So clearly from a financial perspective, the housing market should be strong.
The reality is that the public is nervous about the outcome of either a deal or no deal Brexit and are sitting on their hands. Poor sentiment is the paralysing factor.
If you think about it by sector, first-time buyers are cautious because they are reading reports of price drops, second timers/families aren’t trading up for fear of work stability and retirement downsizing isn’t taking place as the perception is that people’s main asset, their home, isn’t worth as much as it was 12 months ago.
So, the reality is that the current situation we find ourselves in, with the lack of clarity, is the fundamental problem.
I do believe that once a decision is made, the market will adapt itself to the market conditions that apply, and it will be business as usual. Everything is always relative!
My ideal is therefore a decision, either way, with no subsequent rhetoric or scaremongering from either side of the remain or leave camps.
Trevor Abrahmsohn, managing director of Glentree International:
A no-deal Brexit will result in a lower pound against international currencies which, perversely, will act as a further allure to any international purchaser in addition to the 25% drop in property prices which has already taken place. This could potentially stimulate the prime market from its present slumber.
The uncertainty of a no-Brexit deal, could affect sentiments lower down the price ranges for some, but then again, it’s only inflation and mortgage rates that the average property buyer is interested in.
Interestingly, a number of wealthy prospective buyers from abroad have turned instead to the rental market as an alternative to purchasing since if, for instance, they want to stay for say five years, the cost of stamp duty, estate agent and solicitors’ fees for the buying and selling process, is approximately 20%.
This money could be used instead for rent, which is the reason why we probably have the emergence of ‘uber-tenants’ with budgets up to an eye-watering £50K per week, which has never been the case hitherto.
Strangely enough, since new construction has been affected by the glut of supply in the capital, there now appears to be enough skilled workers in the pool of labour available to developers, despite the uncertainty of Brexit.
There is no question that the vexed subject of Brexit has domineered press comment. However, the rest of the government continues relentlessly, even though its headlines may be swamped by the former overbearing issue.
I am therefore sure that if the Housing Ministry has a number of reforms to implement in this sector, it will not be deterred from bringing them forward. I have to say, that the less government involvement the better, since the rental sector is already being weighed down by unnecessary legislation.
Although I speak as a passionate and proud Brexiteer, I am never the less a realist and since 70% of utopia, is utopia, the ‘Maybot’ deal, with a few tweaks on the end stop, has to be the preferred option, even for me.
Sadly, as long as pathological short termism prevails, no one will take the trouble to look to the benefits of the medium to long term.
Although the ‘Maybot’ deal means that we are still in the EU effectively, without influence, for the term of the transition period, this is probably a less traumatic option for those with nervous dispositions. However, this is as long as we can wrestle ourselves free from the European quagmire after a number of years, and this could be a possible solution to this complex issue
Richard Rawlings, agency trainer, marketing consultant, and co-founder of AgentMasterclass and The Lead Hub:
When it comes to a confused market, as platformed by Brexit issues, it’s tempting for estate agents to believe the more pessimistic forecasts and then use these to excuse poor performance, unambitious targets and a lacklustre approach.
It’s actually safer and easier that risking being bullish and then potentially being proved wrong!
The public is probably experiencing Brexit fatigue, which might possibly minimise the otherwise dramatic effect of any deal/no deal on the property market. Real people will make real decisions based on their personal circumstances as they occur whatever the Brexit outcome.
Remember, as agents, we’re interested in turnover, not prices, and I believe the most successful agents in 2019 will simply ignore Brexit and press on regardless. While others are wondering how to react and reducing their marketing spend, there’s business to be had and work to be done – go get!
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
It is almost impossible to predict what’s likely to happen with current Brexit negotiations so the effects on the property market will be even harder to call.
Most buyers and sellers tell us that a ‘no deal’ Brexit will lead to greater property market uncertainty. A ‘hard’ Brexit could prompt more investor interest from abroad although owner-occupiers might be reluctant to commit until Visa rights are clarified.
Rentals are becoming more popular with those expecting capital values to drop following our departure from the EU. But tenants are frequently requesting six-month break clauses so they can exit if the sales market starts to pick up.
Where sales are agreed in the current price-sensitive market, discounts need to reflect buyers’ perceived risk of a possible market downturn.
We’ve noticed some pent-up demand, more viewings and valuations in the early part of January than we had dared to hope for after so many negative reports in the media.
Construction is likely to be adversely affected by a severe skills shortage and any salary cap for low-skilled workers which will exacerbate new home supply shortages.
Ian Wilson, chief executive officer of The Property Franchise Group:
As a PLC, we are taking the ‘Brexit hit’ right now. UK share prices generally are down but property companies are being picked on with especially hard down-valuations.
At least if you are a privately-owned business your paper wealth is not being so roundly trashed!
Do we worry? No, because we are cash generative, low debt and in a difficult market those operators who can afford to keep driving for market share through marketing and acquisitions will be stronger relative to their competition at the end of the cycle.
The only political consensus in the UK appears to be to avoid ‘no deal’ and this is matched by the political consensus in Europe so I will say that no deal won’t happen.
Will inward migration to the UK, which has been a feeder of the demand for rental accommodation, start to decline? Fat chance.
The UK is a politically stable, weather temperate, wealthy nation. It will continue to attract migrants even if the European open door partially closes.
I predicted at our national brand conference last year that Jeremy Corbyn would be Prime Minister by now. He appears to prefer psychologically to be an objector, rather than a leader.
May will stay and get some sort of deal done after a delay.
Chris Wood, industry campaigner and managing director of PDQ Estates:
I believe that whatever the deal (or no deal) there will be a period of uncertainty as the deadline approaches. However, this will be for those people who ‘want’ to move (e.g. upsizers) rather than those who ‘need’ to move (e.g. relocation, divorce etc.).
I keep being told the main problem with building at the moment is a lack of bricks and other materials rather than labour.
Automation within the building industry is already beginning to ramp up with robot block layers becoming more widely used on large scale projects.
Some within both the remain and leave camps have engaged in misinformation and name calling. This has polarised opinions and caused further divisions. As a consequence, the public have lost a great deal of faith and trust in politicians and sections of the media as a whole which is a dangerous state of affairs. Housing should be a key focus of any government along with defence and health.
After appearing on BBC’s Question Time before Christmas, my views on Brexit have been well-circulated. Another referendum or a delay would be likely to spark civil unrest and should not be contemplated by any party.
While I believe a far better deal could have been achieved had we handled negotiations differently, I do not believe another deal is likely to be forthcoming from the EU at this stage and the one we currently have on the table is a disaster.
The World Trade Organisation option has a great deal to commend it as an interim while we exit the EU and as a strong initial negotiating position to engage with the EU on trade talks after March 29.
Kistjan Byfield, co-founder of base property specialists and PropTech startup The Depositary:
Looking at the London rental market in the mid-long-term, I don’t think there will be an impact. There are concerns over entry-level jobs but the reality is these jobs need to be fulfilled.
As such, one way or another this void will be filled – so I expect merely a bump along the way. The middle to upper rental market will remain unaffected by tenant demand.
The attitude regarding investment should remain fairly strong - the main jitters currently are a possible drop in value during this process and other matters not pertaining to Brexit - e.g. stamp duty, buy-to-let tax changes etc.
When it comes to new homes, I don’t think we have ever met a housing target and I don’t see any government any time soon achieving this. Eight housing ministers in eight years has made sure of that.
The handling of Brexit has certainly (further) damaged the public perception of politicians. Ministers have been tinkering with our industry for a long time now with limited understanding.
That said, some of the impacts seen are very much the intention of the policies being set out and (much like Brexit) ministers need to find solutions that try to make everyone happy - not just agents but landlords, tenants, housing groups, lenders…the list goes on.
My ideal outcome is simply to know what is ahead so we can plan and act accordingly. The lack of knowing what is going to happen when and in what way is the most damaging thing of all.
I long for a day, week or (dare I say it) month where I don’t hear the word Brexit.