While a Brexit could result in some changes in the regulation that envelops the sector, many of those principles are driven by global concerns not just European red tape. The approach to real estate law in Scotland, England and Wales is already unique and at its heart is not affected by Brussels – a Brexit would not change that. The property industry's concern is thus focussed less on law and more on barriers to investment.
Whichever way the vote goes on 23 June, as the British Property Federation acknowledges, there is likely to be some slowing of the market ahead of the result, as was experienced in 2014 around the Scottish independence vote. Certainly our recent experience in Cannes would suggest that, over the next few months, many investors will be playing a waiting game (especially while some are also grappling with the SDLT challenges coming out of the budget). If we vote to exit, this uncertainty would continue – Strutt & Parker's Stephanie McMahon (Head of Research) has been quoted as saying there would most likely be a hiatus in the commercial market at that point, while new trade agreements were negotiated and businesses came to terms with the new order.
A recent CBRE survey highlighted concerns that outside of the EU, Britain would lose its status as Europe's top choice for commercial property investment, if trading across borders becomes more difficult, the banks become more cautious or London loses some of its appeal as a financial centre. Conversely many key UK based investors have European funds that may be indirectly affected by a Brexit and are already taking a more cautious approach to new investments or even placing a moratorium on them.
The other side of the coin is the potential effect on trading within Britain – if retailers struggle to trade then their property base will inevitably suffer, potentially hitting the sheds, estates and high street markets. The boom seen in leisure, student accommodation and PRS (the private rented sector) may also suffer if it becomes more difficult to move around Europe. 54% of the hotel professionals surveyed in the European Hotel Market Survey believed that M&A activity and/or RevPAR (revenue per available room) would be adversely affected by a Brexit – piling on the pressure already existing from the rise in non-traditional accommodation such as Airbnb. This prediction is in turn backed by researchers at Credit Suisse, who have forecast an initial fall in house prices on the back of weaker incomes followed by, in the medium term, a drop in housing demand because of lower immigration and the change in the UK's status as a financial hub.
What is clear is that the real estate market flourishes in a stable, growing economy, be that inside or outside the EU.