If we were in any doubts about how politics shapes our lives then a simple review of the last couple of weeks should clear up any doubts. The post-EU referendum political narrative is moving so quickly – on the day I write this Nigel Farage has resigned as UKIP leader and the Tory Party candidates for leader/PM are making their pitches for support – that it’s almost impossible to keep up.
What we can say however is that the chief architects of the Leave campaign appear to be ‘exiting stage left’ at a rate of knots perhaps unwilling, or unable, to clear up the situation that they did so much to engineer. One can only hope our next PM has more gumption and stomach for the fight than Boris Johnson et al because undoubtedly we need someone who can, not just steady the ship, but plot the right course through these pretty treacherous waters.
Many commentators have already run their rule over how a Brexit might impact on the UK property market, although we shouldn’t forget that until Article 50 is invoked there is no Brexit. Of course, that doesn’t mean the impacts aren’t already being felt – you only have to look at the share prices of UK housebuilders to see what damage it is doing.
One wonders however to what extent this new political environment will shape and change what has come before. Old ‘set in stone’ policies are already being jettisoned – last week George Osborne pretty much abandoned his commitment to ensuring a budget surplus by 2020, while this weekend he signalled that corporation tax would be cut to 15%. On top of this we have whispers that the Bank of England is willing to cut the level of capital banks have to hold in terms of their ongoing lending activity – its felt this will help keep the credit markets flowing, although others have suggested such a move signals a greater increased likelihood that the UK is heading for recession.
With Brexit therefore delivering these shifting sands, what about our sector(s)? Well, in the last couple of months there has been much talk about the ‘Call for evidence’ on the home buying process. We are led to believe that the work on this has been done and dusted for some time by the Department of Business, Innovation and Skills (BIS) and it has simply been biding its time, waiting to publish.
This appears to be a wholesale review of the process, one which technically should be open to all kinds of changes if they can be proved to cut down on the number aborted transactions and the cost. ‘Think the unthinkable’ appears to be the message coming out of the BIS however it might be that in a post-EU referendum environment it is not reviewed as the right kind of priority for a new Prime Minister or whoever takes over at the BIS.
We might even wonder if the ‘Call for evidence’ will ever see the light of day especially if the Brexit negotiations do weigh heavily on the UK property market, transaction levels, house prices, mortgage lending, etc. Would the ‘new’ government wish to add considerable and far-reaching changes into the process at a time when the level of activity might be subdued?
Take, for instance, the talk of a mini-HIP, ‘son of HIP’ or ‘HIP replacement’ that some are speculating about in order to get more upfront, transparent information before the process actually gets going. This (again) would be a considerable intervention, as would any attempts to legislate against gazumping or pulling out of a transaction. Would the government want to somehow dampen interest in the property market because of these measures, regardless of the fact they might lesson transaction breakdown? I’m not convinced they would.
So, while Brexit has far-reaching consequences across every part of the UK economy, a bit closer to home it may actually necessitate putting up with the status quo for some time longer. The process might not be perfect but the question is whether now (or indeed the next couple of years) is the right time to be pursuing this. I suspect that many departments will have their hands full with Brexit alone and therefore we could be waiting a long time before the government has the capacity to iron out any creases in the home buying process.
Harpal Singh is managing director of BrokerConveyancing.co.uk