London: Brexit’s uncertainty penalizes the real estate market
Almost three years after the pro Brexit referendum, Britain has had to respond to the electoral call for the Europeans, due to the failure of the agreement promoted – and reviewed three times – by Premier Theresa May, who has already announced her resignation for the 7 June .
The new date to be marked on the calendar is that of 31 October, to which the hope of finding an agreement with government support is referred. For now, however, the situation remains tense, as the European elections in the United Kingdom have testified.
In fact, the opposition between two fronts emerged: on the one hand the Brexit Party (28 seats and 32% of the votes) and the desire to leave the Union without paying duty; on the other, the Liberal Democrats, with Verdi and Snp, stopped at 21% of the consensus and convinced that Britain needs another referendum to stay in Europe.
To pay for this uncertainty is the British economy, and especially the real estate market, in crisis since 2014.
The impact of Brexit on the British real estate market
In that year, in fact, the reform of the stamp duty, the registration tax, had caused a drastic reduction in real estate sales in London: the measure, also confirmed in 2016, provided for a 3% increase on the purchase for foreign customers (non-residents) and for second homes, thus putting a brake on market growth opportunities.
A still stagnant market, because of the general climate of uncertainty caused by Brexit developments. On the one hand we have owners who “remain at the window” waiting for the conditions of sale to improve; on the other, buyers who would like to take advantage of this favorable moment to buy homes at advantageous prices, looking for deals that are however very difficult to find. In fact, nobody wants to sell off and any potential deal is postponed to post Brexit.
The result? The demand does not coincide with the offer and those who want to buy or sell a house in London today find themselves starting long negotiations and which in many cases are abandoned. For some properties with highly sought-after characteristics, it is still possible to keep the purchase price high, but in most cases the owners are forced to devalue the house to make the purchase attractive.
Source: Market research Savills London Index
All that remains in between, in the middle, is difficult to manage and therefore is destined for short and long term leases, thus lowering demand and consequently prices and yield.
This dynamic penalizes families, who often struggle to find a reasonable solution for their needs. The Capital market lacks properties with interesting figures both for the purchase and for the lease: the fees, in fact, are often excessive because they have to repay the mortgage installments stipulated by the owners years before, based on pre-bubble values.
Brexit or not Brexit, therefore, the priority that indicates the market is to arrive at a solution shortly, otherwise the citizens will above all continue to pay the consequences.
Manuel Detogni – Welcome at Home