Since the April 2016 referendum in UK that voted for the exit of Britain from the European Union (EU), the once robust and burgeoning UK property market has been slowing with concerns fueling investor-sentiments.
Though views on what becomes of the market following that historic vote remain largely speculative because nobody has been able to make a categorical statement or prediction on what becomes of the market after the exit.
“Bexit is a significant unknown in the UK property market”, said Jamie Simmonds, CEO, Access Bank UK, in an interview with BusinessDay on the sideline of a seminar on Impact of Brexit on UK Property Market in Lagos recently. Access Bank UK is a subsidiary of Nigerian Access Bank but operates independently in the UK, offering mortgage services to Nigerian clients wishing to buy property in parts of UK, especially London.
There are considerable concerns and Simmonds believes it is not something that can be ignored because since it has impacted on the exchange rate of the Pound to the Dollar, it may impact on housing in short term, “but if you are looking at property market investment, you should be looking at the medium to long term. In the UK, if you are looking at investing in property, you should not be looking at one or two years, but a minimum of five and a maximum of 10 years”.
He assured however, that the market fundamentals remained strong and well set, explaining that the it is very robust when compared to other markets in the European community. “I don’t envisage any significant change. UK is a very cosmopolitan and attractive place that people would like to live in and there is already a shortage of housing in UK” which offers investment opportunity.
Yemi Edun, a director at Daniel Ford International, notes that the dust raised by Brexit is yet to settle and anybody that says he understands what is going to happen is being speculative. But he is optimistic and assured Nigerian investors that London had seen different situations and bounced back.
“Going back in history, UK has survived many adverse conditions and crisis like the great fire, the first and second world wars; we were in London during the dot-com crash in 1998-99. We also saw the July 2005 bombing at Kings Court. There was also the 2012 riot in London that engulfed the entire city”, he recalled, advising that “the time to buy property is when there is crisis. But you have to be careful and do your numbers very well”.
An international real estate firm based in London, Daniel Ford International provides real value to clients in the areas of property acquisition, management, insurance, sales and leasing, development, renovation, etc.
Contrary to popular views, the UK property market has not shifted as a direct consequence of Brexit. Edun says there are other situations and factors that have led to the market shift like taxes and more transparent issues. “We are yet to see the impact of Brexit on the market”, he says.
The property market, according to him, is a big sector of the UK economy. “When you increase tax from 5-12 percent, I believe that is very significant”, he notes, saying, “that has had more impact on the market than Bexit and I must observe that Brexit is not bad news to the Commonwealth nations. I see the European Union countries as neighbours to Britain”.
He sees the Commonwealth nations being the ultimate beneficiaries of the Brexit in the long run, because whenever Britain needs workforce, it goes to the Commonwealth. For instance, the train builders come from Japan, the nurses from Lybia, Uganda, Nigeria, etc. Their teachers also come from these countries. Most of these immigrants contribute to making the UK market strong and viable.
But, Johnson Ememandu, Head of Commercial Banking at Access Bank UK, had noted in his presentation at the seminar that “the referendum result appears to have contributed to a fall in the number of people moving home; UK housing transactions in the second half of 2016 were 9 percent down on the same period in 2015”.
Ememandu, who quoted figures from HM Revenue & Customs, added that Brexit had an impact on confidence in the housing market, pointing out, however, that the main effect of the vote has been in London, which had previously been experiencing a house price boom. “Brexit uncertainty has been driving down house price growth in the capital, now at its lowest level since May 2013”, he said.
To get mortgage for property acquisition, Ememandu listed steps which his bank required from potential buyers, assuring that what they enter into is relationship and not transaction with their clients.
“For residential mortgages, we offer a minimum loan of £100,000 and a maximum of £2,000,000. Capital and interest repayment is for maximum of 30 years. The interest rate is 4 percent over the Bank of England base rate while lending fee is 1 percent of loan amount”, he said.