Housebuilders woke up to a strange new world this morning, where nothing is different but everything has changed. The UK has said au revoir to the EU, but everything will carry on as normal while Boris Johnson tries to squash trade negotiations that typically take years to ratify into 11 short months.
The remain dream may be in ruins, but housebuilders, policymakers and regulators must make the most of this chance to build a better housing market. Here are 10 ways that might be easier in post-Brexit Britain.
- Hacking through red tape
According to some developers, pesky EU regulations, such as the Habitats Directive, caused unnecessary holdups to development projects; at the end of the transition period EU regulations will no longer apply to the UK, freeing developers to battle Britain’s red tape instead.
- More foreign investment
Unlike domestic buyers, international property investors are immune to the effects of Brexit. There has already been a surge of overseas buyers capitalising on opportunities in the remain-leaning southeast, where Brexit uncertainty has rooted domestic buyers to the spot. The threat of a stamp duty surcharge for overseas buyers aside, the UK property market remains attractive to those watching from calmer waters.
- A more competitive market
As property prices have slowed since the Referendum, First Time Buyers have been rushing to the market. Falling property prices may not be good news for everyone, but for Millennials standing on the wrong side of the property ownership divide, it might hold the key to a better future.
- A strike against centralisation
The age of the career politician may be coming to an end. The new Conservative MPs are a world away from the young MPs who were parachuted into Westminster during the Blair and Cameron years. Enter the likes of Lee Anderson, a former miner, and mental healthcare assistant Ian Levy. Already there is talk of parcelling some of the party’s functions out of London. Pricking the Westminster bubble could inflate local planning powers, helping communities feel at home with new developments.
- A global workforce
We can safely agree that access to labour was housebuilders’ biggest concern over Brexit. However, by closing the door on the EU a window may be opened. If the proposed points-based immigration system is implemented sensibly, a talented architect from Argentina will have as much chance as entering the UK housebuilding industry as an eager bricklayer from Bulgaria. The housebuilding industry could have its pick of the world’s finest – as long as the UK makes them feel welcome.
- Safe as houses?
In periods of uncertainty, residential property has historically outperformed other asset classes. Even during the global financial crisis, UK house prices strongly outperformed the FTSE all-share index. Property has long been a safe haven for UK investors during periods of uncertainty. Indeed, UK house prices grew considerably faster than UK equities during the last recession. The spectre of Brexit may continue to manifest itself in increased property investment.
- More affordable homes
While the private sector shied away from building on politically unstable ground in 2019, posting several consecutive falls in new homes registrations, the affordable housing sector picked up the slack with massive gains in its pipeline. With housebuilders such as Crest Nicholson announcing moves towards building more affordable homes to counter Brexit uncertainty, the UK could end up being home to a fairer property market.
- Housebuilders may be able to lend again
The Mortgage Credit Directive stopped housebuilders from lending money to buyers, unless they register as a regulated Financial Adviser. In tough times, this has been a traditional way for housebuilders to help buyers overcome mortgage down-valuations and keep the market moving. Come 2021, this could be the case again.
- Supply and demand
We still have a housing crisis. No matter what shape Brexit ends up taking, the UK’s long-term shortage of housing is not going anywhere in the short to mid-term, and neither is demand for new homes and conversions.
- An end to uncertainty?
It is generally agreed that uncertainty is the Kryptonite of any market. Housebuilders have spent the last three years plastering over uncertainty, but the cracks were beginning to show with falling property prices and a drop in new home registrations. Now the die is cast, demand is rising and housebuilders have nothing to fear but fear itself.
