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Real Estate

The immediate and direct legal impact of Brexit for real estate will be limited, as property law is for EU member states rather than the EU as a whole.

The impact, and when it occurs, will vary according to whether there is a deal on the future relationship with the EU to come into effect at the end of the implementation period (currently 31 December 2020) , and the nature and extent of any such deal (eg what products and services are covered). The possibility of a no deal exit (ie no agreement on the future relationship) remains.

Business confidence, or lack of it, will be a key driver influencing the consequences of Brexit for UK real estate, but it will not necessarily be the only one. For example, effects may:

  • dent business confidence, and consequently transactional fluidity and some property values
  • help some buyers and tenants to achieve more attractive terms on certain properties
  • adversely affect current funding arrangements (e.g. where required loan to value ratios are breached as a result of falling values)
  • affect the availability or terms of finance for acquisitions and developments of certain properties
  • impede the cross border flow of EU-derived equipment, goods or services

What are the other points to note?

  • The import and use of products and services from the EU may be restricted or delayed causing problems for the industry
  • The termination of current arrangements for enforcement and proceedings against EU parties (though this seems likely to be included in any future deal)
  • Several areas of law relevant to real estate derive from EU law to varying degrees, and could change over time, for example:
  • environmental controls and energy efficiency of buildings
  • VAT
  • public procurement
  • some health and safety controls
  • human rights (e.g. ownership/renting of a person’s home)

What actions can be taken?

  • Parties with current funding arrangements should review their terms e.g. loan to value ratios; term dates
  • Anyone acquiring, or leasing, a property should (as always) consider how easy (or not) it may be to dispose of it in the future (however unintended that may currently be)
  • Maximising flexibility, so far as practical, in real estate contracts, developments and funding is prudent
  • Developers, or those planning a fit out project, should review any intended use of EU-derived goods or services

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