Brexit, the housing market and our “wish list” for 2016
Despite UK membership of the EU, property law in Scotland has, over the years essentially remained “national” with minimal intervention at European level. As a result Brexit should have little impact, at least upon the manner in which legal formalities in relation to domestic property are dealt with – property ownership, land registration, leasing and the taking of security over land should all remain unaltered.
There is far less certainty, however, as to what commercial impact the Brexit decision of 23rd June 2016 may have nationally and specifically in the North East of Scotland, where our market has already been damaged as a result of the downturn in the oil and gas markets over the last 24 months.
In the run up to the referendum, agents across Scotland reported a decrease in activity as many buyers adopted a “wait and see” approach. In the local area, where sellers are continuing to struggle to find buyers particularly in the higher price brackets, what further effect Brexit will have on “bricks and mortar” remains to be seen. On the one hand with the strong possibility of a move by the Bank of England to bring down interest rates even further and with some fixed rates currently already at the lowest ever known, some may see this as exactly the right time to be venturing into the property market. On the other hand with many businesses already warning of job redundancies and the moving of head offices to outwith the UK, others may consider this totally the wrong time to make any move at all and will elect to “sit tight” whilst the new terms of engagement with Europe are negotiated.
There will undoubtedly be a great deal of uncertainty over the next few months – something which the North East of Scotland property market can ill afford – particularly until we know what form Brexit will take, what it will mean for the UK and Scottish economies and especially in the Aberdeen area.
Our “wish list” for the next 12 months, locally, would be:-
- A review of the current LBTT bandings
- A removal of the ADS i.e. 3% surcharge on second properties which has already, since its inception in only April of this year, had a very negative impact upon the buy to let, second home and student markets in the North East
- Increased assistance for first time buyers at the lower end of the market
- Reintroduction of tax relief for Buy to Let investment
- A steadying and upward increase in the price of oil. Many companies, at the current barrel price, are reporting a “break even” position. If the price continues in an upward direction and is not adversely and unrealistically affected by market volatilities, this may hopefully see some much needed confidence returning to the oil and gas job markets in Aberdeen.
At the end of the day no-one at the moment can predict with any great certainty what the next period will mean for our housing market, the pound, properties and interest rates generally. Many areas of all our lives will undoubtedly be impacted as a result of the Brexit vote, some for the better and others for the worse.
Although poorer than we have known locally for many years, including the recession of 2008, our housing market in the North East is still performing. Sensibly priced, well presented homes are still moving, albeit much slower in many areas than by historic standards, and the fundamentals of our Scottish property legal system should remain as they are and robust for quite some time to come – which can only be a good thing and perhaps one of the few certainties looking forward.