Brexit – The Impact on the London Residential Real Estate Sector


Brexit – The Impact on the London Residential Real Estate Sector


Former British Prime Minister, David Cameron, promised the electorate a vote on whether Britain remains or leaves the EU by the end of 2017. This heavily discussed issue was given the shorthand name, Brexit. Since 2007, there has been a right for member states to leave the EU under Article 50 of the Treaty on the European Union. The fine details of the mechanics for leaving the EU are not clear under EU law and there is no precedent for it.


The vote on whether to Brexit or not, took place earlier than anticipated on Thursday, 23 June. The Leave lobby won by 52% to 48%. More than 30 million people voted and the turn out for the referendum was 71.8%. The results of the referendum were a surprise to many. It caused a great deal of uncertainty and several investors took a step back in order to reconsider their property purchases. Upon the resignation of David Cameron, Theresa May took over as UK’s Prime Minister and maintains that “ Brexit means Brexit ”. There is still a lot of debate with regard to what this means in practice. However, the recent decision by the Monetary Policy Committee to reduce the Bank of England Base Rate has triggered the reduction of rates by lenders also. Interest rates are now at very low levels, which makes mortgages more affordable for potential investors. This is generally seen as a very effective policy to stave off a recession and increase investment.


So far, the UK economy appears to have with stood the much expected negative domino-effect of the Brexit vote. Nonetheless, we have seen a slump in the sterling. However, share prices have bounced back from a decrease in value with the FTSE 100 and 250 trading higher than they were before the referendum.


Post-Brexit we are seeing an increase in queries from foreign investors, who want to increase their return on investment whilst there is a depreciation in the pound and a decline in house prices. It is seen as a time to invest whilst the London property prices are lower than they previously were and mortgage rates are so favourable to buyers.


Filed under: Blog | Posted on September 1st, 2016 by hz_admin

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