Nick Churton of Mayfair International Realty, based in London, explains the dramatic referendum vote that took the UK out of the European Union, and considers what effect it could have on the real estate market.
Well, we woke up on Friday 24th June to find that the population of our beautiful country had elected to leave the European Union (EU) after forty years. This was a shock – even for many who voted to leave – as most had thought there would never actually be a majority to achieve this. So much for an empty protect vote.
But out is out. We voted to go it alone once more, to take back full responsibility for all our laws, our borders, our revenue and our country. Full exit will take up to two years to achieve under the terms of the existing treaty. But in the short term there are other major consequences. Our Prime Minister, David Cameron – who supported the remain campaign – has resigned, effective from October. This will initiate an election for a new Prime Minister – but not a new government.
The main areas that voted to stay in the EU were London, Scotland and Northern Ireland. Scotland voted with one voice. This may now stimulate a new Scottish independence referendum – a choice to leave the United Kingdom and throw in their lot with the EU as a fully independent nation. However, staying in the EU may not be the prime driver for the ruling Scottish National Party which has been pursuing independence for almost eighty years. This may be their time. Northern Ireland too could even try the same thing and push to join with the Republic. The consequences of this referendum result are incalculable which makes this a truly historic event not just for the UK but also for Europe.
Some EU member countries with strong anti-EU elements such as Holland, Denmark, Sweden and even France may, in time, have their own referendums bringing further instability to the European Union. Certainly it looks as if dreams of a federal Europe with a European army could have received a huge setback.
Perhaps this vote may even reflect what is going on in the US at the moment where much of the electorate also seems disaffected with the political elite. The tectonic plates of political dissatisfaction catch up with even the most stable democracies sometimes. But if there is one lesson to be learned here it is to be careful for what you wish for.
The next months and years will be full of uncertainty for the UK. But in this day and age name a place not full of uncertainty? While there are major concerns there are also great opportunities. Britain has a very mature parliamentary democracy – perhaps the most mature – dating back to Magna Carta in 1215.
The nation has withstood challenges over nine hundred years that would have shaken lesser nations to their roots. It will make the most of this unexpected chance and fresh beginning.
The UK may have stepped back from the European Union but Britons wont step back from wanting to live in countries like France, Italy or Spain. Neither will they stop wanting to buy real estate in the USA. This is also a chance to take back control of our domestic real estate market. This has been investor-led for over a decade. Prices have spiraled and new taxation makes property investment – especially in prime central London – less attractive than it was. With rock-bottom interest rates and a possible pause in the rise in values this should put much more control back in the hands of buyers who want a home rather than an opportunity to make a killing. Investing in the UK may be attractive but living here is so much more so.