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What does Brexit vote mean for the property sector?

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Simon England, head of the property and construction solicitors at Harrison Drury, outlines the possible impact on the sector following Britain’s decision to leave the EU.

Now that the UK has voted to leave the EU, it is important to consider the consequences that this may have on the property and construction sector, and how people can act to mitigate the impact on their businesses.

Despite the fact that Britain’s exit from the EU might not formally take effect for at least two more years, the effects of Brexit are already being felt in the industry as some property deals have fallen through following the announcement of the result of the vote, either as a result of pre-existing Brexit clauses in property contracts or generally a more cautious approach.

However, the government and Bank of England are considering measures that could be introduced to guard against an economic downturn, such as reducing interest rates, although it is yet to be seen what impact this will have.

Although it is difficult to predict what our relationship will be like with the EU post-Brexit, it is important for businesses to plan ahead as far as possible by considering the potential implications and possible solutions.

Key issues to consider include:

  • Contractual terms: These could be enforced against a company in light of the Brexit vote which could have potentially serious consequences for many businesses. Some contracts contain Brexit termination clauses which may now be implemented.
  • Employment of EU workers: Although the sector relies heavily on EU workers as a result of the skills shortage in the UK, the Leave campaign argued for tighter controls on immigration from EU countries. If stricter controls are brought in this could affect the property sector by reducing the workforce available which would result in wages rising and higher costs for employers.
  • Changes to guidelines and regulations: Once the UK has left the EU it could mean that regulations currently in place will change and businesses will need to keep abreast of developments in this area.
  • Fluctuations in currency: The impact of this and market disruption may have knock-on effects on investment. There are signs that while some investors are choosing not to invest while they wait for the markets to stabilise, others are keen to take advantage of the uncertainty to get a bargain.
  • Potential falls in property prices: Although prices are expected to drop in the short-term, many people predict that this will not remain the case for long. This could have a positive impact on first time buyers and on buy to let landlords who may be able to get increased yields from properties.

Again it is important to point out that we still don’t know what the post-Brexit landscape will look like for the property sector and are unlikely to know for many months to come.

In the meantime, it’s important for businesses in the property sector not to panic, but instead make informed decisions as more information comes to light.

If you operate within the property and construction sector and want to know about how the Brexit vote will affect your business interests, call Simon England at Harrison Drury solicitors in Preston on 01772 258321. We also have a team of property and construction lawyers based around Lancashire in Kendal, Garstang, Lancaster and Clitheroe.


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