The courts have rejected the government’s appeal and ruled that parliament must give approval before Article 50 can be triggered. Considering that the invoking of Article 50 is expected to be the biggest single event impacting the UK economy this year, it is only reasonable to wonder what the consequences of this ruling will be on key sectors such as property.
One of the simpler things this may affect is timing. Brexit Secretary David Davis indicated that the government was still committed to its original plans to start negotiating Brexit by the end of March, but with additional hurdles to pass and the SNP planning to put forward multiple amendments it is possible that delays in the process of Brexit might emerge in spite of his best efforts.
But what about the specifics for investors in UK property? This depends very much on whether we are talking about domestic or international investors.
Domestic Property Investors
The ruling has relatively little bearing on the position of UK-based investors in British property. The decision is unlikely to result in serious or major changes to the pre-existing Brexit situation, and the legal or practical position of investors who are based within the UK is not set to be seriously impacted by Brexit as a whole. Furthermore, neither the decision to leave the EU nor the recent ruling that parliament should be consulted first have done anything to substantially change the underlying fundamentals of the UK market. There is still a high level of demand and a shortage of supply, and this can mean nothing but a strong underpinning for the integrity of property as a market for investment.
International Investors
International investors have long been major players for the UK property market, providing a large portion of the funds that flow into the sector. The ramifications of this decision are somewhat different, and somewhat more significant, for them. After all, it is Britain’s economic and political relationship with the outside world that will be changed by the Brexit process.
The biggest impact that Brexit has had on foreign investment so far is, contrary to most expectations at the time of the referendum, a positive one. Sterling’s rapid loss of value in the wake of the vote, while of course not a positive thing in itself, stimulated foreign investment in UK property by giving overseas investors a more favourable exchange rate and an opportunity to buy bargain properties.
This has in turn helped to prop up a sector that is already expected to remain relatively resilient to the uncertainty and to any turmoil involved with Brexit. The exact impact of the Article 50 ruling on this situation is not yet certain, but is unlikely to be seriously negative. In all probability, it will either do nothing or prolong the wider economic uncertainty that is keeping the pound’s value low and the prices of UK properties for international investors low.
Author Bio
Hopwood House are property investment specialists, with a wide range of UK property investments in the Buy-to-Let, Student and Commercial Property markets.
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Daniel Peacock