The Impact of Brexit on New Build Housing Transactions
Wednesday, December 16, 2020
Wednesday, December 16, 2020
With the law underpinning the conveyancing process being governed by the country in which the property is located, the legal process surrounding buying and selling property will remain predominantly unchanged; irrespective of whether a ‘hard’ or ‘soft’ Brexit is achieved. Less resistant to the impacts of the upcoming changes, however, will be the property markets, mortgage lenders and, ultimately, the developers themselves.
The impact of Brexit upon new build housing developers will be, to an extent, unclear until the terms (or possible lack of terms) of a Brexit agreement are finalised. Larger developers with higher demand for materials or developers who have previously opted to import their materials from the EU will almost certainly find that they are faced with higher building costs, with cost for materials reported by Build UK to rise by between 2 and 8% in the event of a no-deal Brexit. Delays at borders are also likely while goods are subjected to previously unrequired checks, which may impact supply chains where developers have not adequately prepared for this. These will almost certainly come with cost implications for the developers, and may well ultimately be costs which they look to offset to buyers by way of increased house prices in the future.
In September of this year, the Government unveiled an £11.5bn programme to build 180,000 new homes across the country between 2021 and 2026, and the 2020 spending review published in November promised increased commitment for housebuilding, indicating a continuing intention to keep supply of new build housing plentiful. However, as yet it remains unclear whether these pledges will be reviewed in view of the result of ongoing Brexit negotiations.
At least in the immediate future, mortgage rates will likely continue to be suppressed by the various COVID-19 relief measures put in place over the course of this year. In good news for those buying older properties, a number of lenders have also recently begun to reintroduce 90% mortgages, which will come as a welcome development to those saving for that all-important deposit. However, at present these are reported not to be available to new build properties, nor will they be available when used in conjunction with assistance schemes such as the Help to Buy equity loan scheme. Lenders are also reportedly becoming more stringent in their lending criteria in the expectation of an increase in house prices following Brexit and the tailing off of COVID-19 relief, meaning those with lower deposits may find it more difficult to secure an offer.
The good news for buyers who have successfully secured a mortgage, however, is that your most substantial hurdle has likely been cleared. Provided your developer keeps you fully advised as to timescales from the outset of your purchase, and of any delays which may arise throughout, you should notice little difference in your conveyancing transaction itself.
The full effects of Brexit on the UK property market remain to be seen. As such, the importance of obtaining expert advice from the outset of your transaction has never been more important. At Samuel Phillips Law, we understand how daunting the process of buying your first home can be, particularly at such an uncertain time will be more than happy to guide you through the process step by step.