Perhaps, in a referendum fought and won on immigration control, access to the single market was always going to be the casualty. However, we do finally have some clarity, if not certainty, over what Brexit actually means.
Now we know it means a hard, total and final exit from the EU, housebuilders can at least start building on more solid ground. Here’s what we know:
Uncertainty is kryptonite to any market – especially financial and property markets. Theresa May’s speech did at least see off any doubt – Brexit is certainly going to be hard and the UK will relinquish access to the single market.
“Real estate contributes £94 billion annually to the UK economy, representing 5.4 per cent of GDP, and, in Theresa May’s Brexit speech today, we are pleased to see that the government is focused on ensuring as much certainty as possible, which will support our industry to drive forward much needed growth across the UK,” said Melanie Leech, Chief Executive, British Property Federation.
The currency has already expressed its thanks to the PM by having its best day’s gain since 2008. However, many analysts believe this will be short-lived. “The pound rallied on Mrs May’s confirmation that both Houses of Parliament will have a vote on the final terms of Brexit. But reality will ultimately sink in,” David Lamb, head of dealing at FEXCO Corporate Payments, said.
“While sterling is enjoying a recovery from Monday’s abrupt low against the dollar, it is now more exposed than before,” Lamb added. “With any lingering hopes of a partial or fudged Brexit gone, the support that such comforting vagueness once provided has also evaporated.
“While the Prime Minister talked of providing ‘certainty where possible’, she also vowed not to provide a running commentary on Brexit negotiations. The information vacuum this creates will put the Pound even more at the mercy of rumours and skittishness than before. The result can only be continued volatility. Sterling watchers should buckle up – we should expect a bumpy road ahead.”
ACCESS TO LABOUR
Doubt remains over the most pressing issues for housebuilders: access to labour. The rights of EU citizens are dependent on reciprocal agreements with other EU countries, many of which have different opinions on the matter. No clarity on future policies about who Britain might lower its drawbridge for has been given.
“Continued uncertainty over the status of EU citizens currently living and working in the UK, and of UK citizens living and working in the EU is casting a long shadow over the architecture sector,” RIBA President Jane Duncan said. “Around one quarter of ARB registered architects are EU citizens, and they make a substantial contribution to our vital industry. Our Government and governments across the EU must act swiftly to resolve this issue.”
There was always the worry that Brexit would dominate the conversation. We had a housing crisis long before the British public set foot in a polling station on 23 June, and can’t afford to put aside the industry’s needs while lengthy trade deals are negotiated.
“As negotiations unfold, we also ask the government to not overlook ongoing fundamental issues such as the UK’s overly complicated planning system,” Leech said. “It is not adequately focused on delivery with resourcing in Local Authorities continuing to decline, which continues to negatively impact the country’s development pipeline. The government also needs to provide a stable and predictable tax system that encourages both UK and foreign investment, including simplifying VAT to incentivise development and renovation activity.”