Well, the Referendum will, unfortunately, bring some uncertainty in the three to four weeks, before and after, the chosen date (which looks like June 23) and this is never a good time for positive decision-making activity particularly if the Polls are looking favourable for a Brexit.<\/p>\n
Unfortunately, I fear that the Great British Electorate has not learnt the lessons from the last Election (May 2015) where Polls consistently misinterpreted the underlying feelings of the populace and, therefore, reached the wrong conclusion and may well do so again this time.<\/p>\n
If we remain \u2018In Europe,\u2019 needless to say, nothing will really change and I predict that the market for property up to \u00a31million will carry on very nicely (thank you) with growth of circa 8% per annum, urged on by the government\u2019s Stamp Duty \u2018bribes\u2019 in this sector, before the Election contained in the Autumn Statement of 2014. \u00a0Activity in the middle market and prime\/super-prime sectors will continue to be dampened by the aggregate affect of Stamp Duty \u2018hikes\u2019, fiscal changes to Non Doms, ATEDs, oil price drop, the gyrations of world stock markets and the general slow down of the World Economies.<\/p>\n
In this sector, illiquidity is a major problem where the numbers of transactions are down by up to 50% or more in London. \u00a0Underlying prices will continue to ease by about 10% per annum as the number of available properties overwhelm the dwindling pool of \u2018real\u2019 cash buyers around at any one time.<\/p>\n
Thank goodness that with oil prices remaining low there is no upward pressure on inflation and, therefore, Mr. Carney can be put back into his \u2018little box\u2019 since Interest Rates (and therefore Mortgage Rates) are not going to rise for a year to eighteen months or so.<\/p>\n
The real question is, \u2018How will Brexit affect the Residential Property Market in London and the UK?\u2019<\/p>\n
In the months following the Referendum it would take a little time for the Great British Public to digest the ramifications of being outside of Europe. \u00a0David Cameron will be \u2018the walking wounded\u2019 for a while and in all probability will bring forward his retirement plans earlier than he would otherwise have liked. \u00a0Whether the new leader will be Osborne, or more likely Boris, will be the question on everyone\u2019s mind. \u00a0Whilst this will generate some uncertainty at first, once it settles down, there is no reason to believe that the prevailing economic policies will change very much although, I am sure, if it is Boris, he may want to \u2018stamp his mark\u2019 by way of nuances to existing polices. Let\u2019s hope Stamp Duty is one of them.<\/p>\n
The point being that I firmly believe that there will be inward investment from multi-national companies and investors (such as Nissan, Honda, IBM, Ford, Google, Microsoft etc.) who will want to benefit from the new Social Contract and relaxed labour laws that will be introduced in the period after the Referendum that will enable the UK economy to \u2018spin faster\u2019 once it is free of the \u2018shackles\u2019 of European regulations which has served to slow our progress to date.<\/p>\n
\u2018Operation Fear\u2019 will make the Electorate believe that there will be an exodus of Banks going to Frankfurt from London but this is all nonsense as evidenced by the latest news that HSBC has recently confirmed (even before the Referendum) that its \u2018hub\u2019 will not move to Hong Kong as was much speculated hitherto.<\/p>\n
The chances of Frankfurt becoming the new Financial Centre of the World is unthinkable \u2026.. has anyone been to Frankfurt? \u00a0Let\u2019s put it this way …. for excitement the average \u2018Frankfurter\u2019 leaves their home at 7.30pm \u2018to watch the traffic lights change!\u2019<\/p>\n
Thatcher de-regulated London in the \u201880s and made it open for International business. \u00a0This allowed it to metamorphose itself from a souvenir Capital (rich in heritage as Paris is today) into \u2018The Greatest City on Earth\u2019 where the centres of excellence are all, very conveniently, in one place. Today, London is at the cutting edge of technology, couture, cuisine, culture, commerce and proudly boasts that it has the largest Financial Services Industry in the world. \u00a0As such, I believe, that we are, therefore, unassailable should the European countries want to prize this \u2018mantle\u2019 from us.<\/p>\n
If under a new Leader the new Conservative administration is more sensitive to the \u2018woes\u2019 of property owners in London, then an emergency Budget could be arranged to try to address some of the more draconian measures that have been imposed to date. \u00a0Even if George Osborne becomes Prime Minister the new Chancellor may be able to have another look at the damage wrought on the middle-income groups that have become seriously disillusioned by the policies to-date since the Election. \u00a0Even the first time buyers have become disenfranchised by the growth in the property market at the bottom of the ladder and since the changes to Buy-to-Let fiscal legislation there will be fewer private rental properties available, with prices rising, as former landlords sell these investments which is a \u2018double hit\u2019 for them.<\/p>\n
Private Pension holders feel that they have been betrayed by this, and previous, governments and they are not \u2018happy bunnies\u2019 particularly if the present Chancellor ignores the lobbying which is now taking place and further restricts Tax Relief for pension contributions in the forthcoming Budget of March 2016.<\/p>\n
I know that the Chancellor wanted to \u2018cool\u2019 certain parts of the \u2018runaway\u2019 property market in London, but as we all know, governmental intervention is notoriously \u2018clumsy\u2019 when they try to interfere with markets. \u00a0He probably didn\u2019t appreciate the damaging affects of his measures on liquidity and even Stamp Duty Receipts that, paradoxically, despite the rises in SDLT rates, are down by circa 25%. \u00a0This exacerbates his attempts to reduce the Budget deficit this year (which is circa \u00a373billion) that is already under threat by reduced Corporate Tax Receipts as a result of the slow-down in the UK Economy that is now taking place.<\/p>\n
There are interesting times ahead of us but uncertainty undermines confidence and, as such, the sooner that we get this Referendum over and done with the better! \u00a0Let battle commence. Well, the Referendum will, unfortunately, bring some uncertainty in the three to four weeks, before and after, the chosen date (which looks like June 23) and this is never a good time for positive decision-making activity particularly if the Polls … Continue reading
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