Game of Loans: Would Brexit be the wrong medicine for the housing market?

Game of Loans: Would Brexit be the wrong medicine for the housing market?



The only thing that seems certain about the upcoming in/out referendum is the amount of uncertainty on both sides.


The only thing that seems certain about the upcoming in/out referendum is the amount of uncertainty on both sides. I’ve overheard many knowledgeable, well-to-do colleagues and industry professionals struggling to have a coherent debate on the pros and cons of being in the European Union. Whilst this may not say much about the level of knowledge and comprehension within the industry, myself included, the upshot of this is that no one really knows either way. This paints an even vaguer picture for the building industry as well as for the housing market. In order to get Britain building, I feel we need to get our heads around what could happen to the industry should Britain leave the EU.

One phenomenon that appears to happen throughout every period of uncertainty is that people in Britain do nothing. Similar to the build-up to the recent general election and Scottish referendum, investors and those involved in property are understandably more cautious. Instead of diving into the market they hold off and watch how events will unfold.

Some critics suggest that we would immediately dive into a recession if we pull out of the EU. Our exports could be hit which would significantly affect our balance of trade. This could drive up costs for developers making purchasing supplies and raw materials more expensive, and hitting the SME builder harder than most.

On the other hand, it’s pertinent that the Mortgage Credit Directive should be making its way into the industry imminently, a stark reminder of the lack of direct control Britain has over its own regulatory systems. With a lack of foreign investment, we could see house prices drop which would benefit some savers that are watching house prices drift further and further away from what is affordable. Homeowners and landlords would lose out as a result; however when there are winners this naturally means there will be losers. Optimists would argue against me saying that leaving the EU could even make house prices increase further, but lenders would be quick to point out that incomes would drop lowering the amount that could be borrowed and reducing the demand for property and new homes.

Suffice to say everyone is an expert on a potential Brexit and yet no one knows the answer. It makes our jobs as lenders all the more interesting as it may come down to us to help plug the gap in investment and help fuel another economic recovery, perhaps on an even larger scale to the recent credit crunch. Last year, Regentsmead made a pledge to help ‘Get Britain Building’ and whether we are in the EU or not, we will stick to our promise and help fund the building, converting and refurbishing of properties to help feed the ever-growing demand for housing in this country.



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