Jonathan Christie is the chief executive and co-founder of The Property Buying Company – a cash buyer of property, led by a team with over 50 years’ experience in purchasing homes. Throughout his career, Jonathan has completed on over 3000 properties, and set up a roster of sister brands focused on property sales, investments and deal sourcing.
What with COVID 19, the Brexit agenda had somewhat taken a back seat until the government announced an extension to the transition period earlier this month.
Not that it’s the first time the Tories have played the ‘Brexit long game’, with the vote on Article 50 also being postponed last year. Although, it does come as little surprise, as Johnson’s stint in office has been far from the smoothest, juggling both Brexit and the UK’s response to the COVID pandemic; the perfect time for the EU to lay their cards firmly on the table?
Michel Barnier, head of The EU’s Brexit Task Force, reiterated last week that the Brexit transition period is likely to conclude in one of three ways: the UK reaches a deal with the EU, talks between the two sides breakdown and the UK leaves on WTO rules (like Australia) or a form of ‘provisional’ deal is struck in an effort to curb a no-deal.
So the question we now must ask is, what would does Brexit actually mean and where will it leave the housing market in 2021?
If a deal is done
While the full extent of the risk posed by Brexit is unknown, it’s fair to assume that if a deal was reached that the economic risks associated with Brexit may be slimmer. Whether or not they will be slimmer, ultimately depends on the specifics of the deal and if of course how economically viable taking a ‘leap of faith’ onto WTO rules would be for the UK.
Nevertheless, it’s what a deal with Brussels symbolises that is of value to a lot of businesses. The idea of strength and unity between the UK and the EU post Brexit is encouraging, as it should mean any changes to the way in which most businesses operate, are far less drastic. We saw this confidence reflected through the price of the pound as it was disclosed that a deal between the UK and the EU is likely before Christmas. The pound was trading at a high of $1.35 last Wednesday. An encouraging sign for the economy if a deal is struck, which we may see reflected through property prices post Brexit.
The ‘No-Deal’ Brexit
A ‘No-Deal’ would arguably be one of the biggest economic shifts for the UK since we joined the single market in 1973, so as you’d imagine the potential impact on the economy, and indeed the housing market, is up for debate.
It’s speculated that a ‘No-Deal’ would provoke a significant change the face of the UK’s business landscape, particularly within the financial sector. Many international banks and insurance companies that invested heavily in the UK, particularly London, are now boasting EU outposts and could potentially relocate abroad if operating in Post-Brexit Britain becomes less profitable. The impact of which we could see reflected across the housing market, be it through property prices, land values in the city or accessibility to mortgage lending.
Although, it could be argued that Brexit itself is old news, and that the uncertainty surrounding a ‘No-Deal’ has somewhat died a death because of the sudden need for a COVID 19 vaccine. After all the virus has almost overnight influenced how the majority of the world’s industries operate and function. So perhaps then, it’s not so much a ‘no deal’ that the property industry should be worried about, but instead the success of the Pfizer-BioNTech and AstraZeneca vaccines come 2021?
A provisional ‘No-Deal’ agreement
Time has been the main issue with this year’s Brexit negotiations. Barnier himself admits it, saying: “we have been negotiating for only 9 months. It took five years for all previous agreements”. So there’s reason to suspect that this third option could be intended as a calming measure to give both sides more time to come to agreement, because as Boris’ European adviser, David Frost, made clear no “significant progress” has been made since both sides vowed to “go the extra mile” earlier this month.
Although, we must consider the impact of this hybrid deal and how it can be interpreted. On one hand, it could be the EU saying they’re keen to strike a deal with the UK and don’t want to lose us as a valuable trading partner. Whereas on the other hand, it could be a sign that they’re unsatisfied with what’s currently on the table and want to ‘keep at us’ so to speak, to see if they can sway the negotiations more in their favour. Eurosceptic or not though, there’s no getting around the potential uncertainty that this new deal could inflict.
We mustn’t forget that what the property market needs right now, and indeed thrives off, is confidence. Confidence in leadership, confidence in the economy and as of June 23rd 2016, confidence in Brexit. Qualities that could easily be eroded by opting for a last minute get out clause.