The Brexit Result: What Does This Mean for You?

The final result of the EU Referendum is soon to be here. We know that many of our clients from around the globe want to be the first to hear how this will affect the property market going forward, and what changes can be expected. That is why, our property expert and Managing Director, Chris Whetstone, delves into the outcome of the referendum, noting some helpful tips that can help you as a property investor for the latter part of this year, and going into 2020. Read our article below to discover the latest Brexit news, or click the video below to listen to our latest webinar covering this, and your pressing questions.

 

 

It seems that not a day goes by without Brexit news in this journey that has been full of twists and turns over the last 3 years.

Re-Cap

Regardless of what you think of him, Boris Johnson re-opened the EU treaty which the EU stated was not open for negotiation. So he has to be commended on that. However, despite the bluster and rhetoric that the prime minister has stated over the last month, the reality is that the deal is still 95% of what was negotiated by Theresa May.
It was pretty unanimous across the board regardless of your point of view that the deal Theresa May negotiated was neither in or out, therefore it was the worst of everything, we still had to pay into the EU pension funds, still had a pay in money to the general fund, still had to follow a certain amount of rules, could not negotiate free trade agreements whilst not having any say of what happens within the EU.
On the back of this, Theresa May’s deal was rejected and when Boris put his version in front of parliament this was also rejected. So we were at a stalemate. Something had to change. As of last week, Parliament voted for a general election which is set to take place on the 12th of December.

 

How will this play out?

There are so many permutations of this election that we are really heading into unknown territory. If this was a straight forward election typically the Tory party should win an outright majority. Currently, the labour government is not trusted by business, the Jewish community and typically older voters vote Conservative.

However, one issue that stands in the way of the Conservative party is the Brexit Party. Although they are both the parties of leaving the EU the issue is that one wants to leave with a deal and the other wants to leave without a deal and start negotiations from scratch. This is causing a conundrum between voters and could effectively ‘split’ the vote that would typically go towards the Conservative party

Labour has a similar issue. There are two parties on the other side of the coin who want to remain in the EU so this side of the vote could be split also. This then points to yet another hung parliament. If this is the case then I feel that the Conservative party will form an alliance with the Brexit Party to get a working majority in the house.

If this does take place then Brexit will look very different indeed.

We will leave with a much sharper deal that we currently have or indeed a no-deal that can then be negotiated from scratch.

There is a bit miss-conception that no deal means ‘crashing out’ of the EU. This is a term that has been branded by the remain side of the house to cause panic among voters. The reality is if we leave the EU with or without a deal we still have to do a lot of the same. We still have to negotiate a free trade deal, tariffs, immigration, laws, financial input/output etc, however, it may be in fact easier to negotiate this from a clean slate rather than trying to work from a deal that was not ideal in the first place.

Where does this leave the property market?

Well, as we have said all along, there are only three outcomes:

  • Overturn Brexit and remain
  • Leave with a deal
  • Leave without a deal

Regardless of what one takes place, the reality is, the UK population still need homes to live in, and that is not going to change. 

The property market has historically only changed based on three fundamental points:

  • Interest rates/mortgage legislation
  • Taxation
  • Legislation

Other political hurdles have a small effect but nothing major. If we look back to what happened in the last property crash, this was simply due to interest rates increase and mortgage legislation which got tighter after the event. We conducted a survey of what clients felt the property market fell by in 2008, the outcome was surprising. Most people thought the market fell by 30%+, however, the reality was in the worst crisis in our lifetimes the market only fell by half that, at 15.9%.

So what do I do? 

So the reality is, Brexit or no Brexit, the property is unlikely to fall as much as it did then. Even so, we advise that you look at properties that are below market value by up to 10-15% in order to mitigate any negativity. Also, we feel that the fundamentals are still good for the property market, therefore, we simply don’t foresee a crash.

Brexit has already had an impact on prices in London and a recent report by Zoopla demonstrated healthy growth in the North of the UK.

 

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The Brexit Result: What Does This Mean for You?
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