UNITED KINGDOM
Britain enjoys crucial export benefits from Europe,
being Britain’s biggest source of foreign investment.
The business deals circulating between Britain and
Europe have made London known for its global
financial influence and global centre for financing.
For Britain, breaking away from the European union
without a deal would mean no access to Europe by
Britain’s businesses for business deals —
something
that is expected to have major impact in the business
and economic development of Britain.
Business/ investor confidence in
Britain
Businesses have begun announcing their exit from
British businesses due to Brexit. Some are losing
confidence in Britain. In fact, investor confidence
is largely under threat in the UK as a result of the
ongoing Brexit debate... Even local UK companies are
suffering from the enforcement of Brexit.
Since July 2019, two UK companies revealed that
their business has slowed because customers are
filled with an outlook of uncertainty. Brexit has gone
beyond just being a business growth scare to being
a social developmental threat. With major investors
and customers at UK’s IT service provider, Micro
Focus pulling out of business deals, the company
anticipates a weak revenue for the year 2019. For
this company, Brexit seems to have “flagged a freeze”
on the company’s spending. Additionally, in terms
of advancing the company’s objective of offering
employment opportunities to the UK society, the
company has been dented, as it has partly failed
to live up to its objective. Economists in the UK are
speculating that UK will be hit by a recession as a
result of the stalling Brexit debate.
Offshore property buyers in the UK
With varying thoughts between political parties
in the UK’s House of Commons, the way in which
Britain will exit from the European Union is not clear.
However, the economic uncertainty (caused by the
long Brexit debate) has affected the housing market
in Britain. Property sales have dropped in some areas
in the UK, and the sales volume in the year 2019 have
also dropped in comparison to previous years.
If a ‘no-deal’ divorce between Britain and the
EU takes effect, the UK is most likely going to be at
a default position. According to the accountancy
firm, KPMG, “house prices in the UK would fall by
about 6% minimum on a no-deal Brexit.” In a worst-
26
OFFSHORE GUIDEBOOK 2020
case scenario house prices would fall by about 20%.
Moreover, the Office for Budget Responsibility in the
UK announced that a 10% house-drop in the middle
of the year, 2021 is expected. In February 2019, Bank
of England Governor – Mark Carney said, “UK growth
would be guaranteed to fall in the event of a no-deal
Brexit.”
It cannot be disputed that the falling of property
prices in the UK is advantageous to offshore property
buyers, depending on their investment intentions.
For residential purposes the price drop could be
of great benefit. However, for real estate investors,
buying property to let and turning these houses into
commercial buildings (depending on their locations)
the drop in the house market in the UK could pose a
threat to the growth of their businesses. This is due to
the economic and business growth instability in the
UK as a result of Brexit.
“Recent price drops in some regions mean that
it’s becoming more of a buyers’ market, so you
might be able to get a good deal. Besides, buying
a property should generally be regarded as a long-
term investment and, even if there is a short-term
price drop, house prices will probably stabilise in the
future,” says Mortgage expert, David Blake.
AD
Property sellers
A drop in home prices in the UK hits hard on home-
sellers. A house price index released in November
2019 revealed that it has taken home sellers longer to
sell off properties recently than in previous years. It has
taken about 77 days on average to get one property
sold if listed in January. It is believed by many that
the demographics are as a result of apprehension in
buyers about buying a home before the elections and
until they have more clarity on Brexit.
Chief executive at NAEA Propertymark, Mark
Hayward said, “Brexit is undoubtedly causing
uncertainty in the housing market, which in turn affects
sentiment and decision-making. The impending
general election period is just providing more
uncertainty and we’re seeing both buyers and sellers
put their plans on hold as a result. Once the election
has passed, and there’s clarity on how and when we’ll
be leaving the EU, we hope there will be a degree of
certainty which may trigger a flurry of activity.”
SOURCES The Guardian, The New York Times,
NAEA Propertymark
Investing in overseas
property is smart. Doing
it without experts is not.
Consult the experts.
HURST & WILLS
LONDON | CAPE TOWN
Contact Hurst & Wills for independent offshore property advice today.
www.hurstandwills.com | [email protected]