On 23rd June the UK voted to leave the European Union. The vote was close a 52% to 48% with various geographic areas and demographic age groups being polarised towards the “in or out” decision.












This historic vote to leave the EU has created a “divide” of opinion across the country and it is important for the benefit of everyone that we all start to pull together and, irrespective of ones views, work to make the best of the decision that has been taken.

In the towns and areas that Lenwell operates the result were as follows:

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Naturally everyone wants to know what this means for them, the UK economy, immigration, the housing market etc. and the reality is that, just a few days after the outcome of the vote, no-one can be completely clear on what the future holds. There is bound to be some uncertainty and “bumps along the road” but talk of Armageddon and Domesday are unhelpful and wide of the mark.

The uncertainty leading up to the vote is now behind us and, whilst there will remain some uncertainty going forward, the whole country, irrespective of individual views, now needs to unite behind the decision and make it work. Negative talk could easily undermine the fundamentals of our relatively strong and improving economy and inadvertently deepen any downsides and reduce the height of any upsides.

The initial falls in the stock market upon news of the vote wiped around 8% of the value of shares in the FTSE 100 as many “automatic sell” triggers were hit but, by close of trade, this had reduced to around 3% as the market came to terms with the decision.
Experience shows that the property market is always remarkably resilient and will adjust accordingly. The facts are that in the UK we have a surplus of demand over supply in both the owner occupier and rental sectors. The referendum vote will not change this position.
Interest rates are currently low. There will be some uncertainty as to where these head in the months ahead but we have lived with the possibility of rising rates ever since the Bank of England moved to a 0.5% base rate way back in March 2009.

A fall in the value of sterling could bring some recessionary pressures but, by definition, we need six months of negative growth before we could fall into an official recession. Recessionary pressures could lead to the Bank of England raising rates but this is likely to be in a slow and controlled fashion.
Any fall in the value of Sterling will make the buying of British goods, services and property by people from other countries cheaper. Central London property may actually see an increase in activity as a result and this lift in confidence may “ripple out” into the Home Counties and beyond over time.
Mortgage interest rates are commonly fixed for two to five years by buyers and so, whilst they may become marginally more expensive in the months ahead, they are unlikely to adversely impact on affordability and people will not feel the effect, if any, for some years by which time the way forward outside the EU will be much clearer.
Affordability was a growing issue before the referendum and will remain one subsequently. House prices and rental values have shown signs of having peaked but with the supply and demand balance where it is, we are unlikely to see any significant or dramatic changes in the months ahead.Property investment has always been a medium to long term process. There have always been short term rises and falls but the general trend over time has been upwards. This will continue.

Our exit from the EU will take at least two years to achieve under article 50 and it is expected that we will not issue that notice until most of the negotiations over our exit have been finalised.  To issue article 50 too soon, would impose a tight timeframe on us and possibly weaken negotiations.
Of course, our exit from the EU has been decided on the basis that the majority feel we will be better off having left, having greater control over our law making and not paying for the EU “machine”. Undoubtedly there will be benefits from a decision to leave and, as a country, we need to ensure that we maximise these and remove or at least mitigate any of the potential downsides.
In short, the road ahead may have a few bumps and potholes in it but it is still a road forward.

The property market was there before the vote and is still here after. People need places to live and the reasons why people move continue.
At Lenwell, immediate signs of activity since the referendum have been encouraging and, as always, we are more than happy to discuss your personal situation, and present or future requirements, with you.

Best wishes

Rob Wellstead
MD of Lenwell

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