The vote to leave the European Union is a “monumental” one, but one that will impact more on the market and the environment than on property law, lawyers have said following the referendum result.
Property law and the market
Rob Thompson, head of real estate London at Irwin Mitchell, said: “Britain’s decision to leave the EU is monumental. However, property law is not heavily influenced by EU legislation and, therefore, Brexit will be a market issue, rather than a strictly legal one.
“In recent months, the press has been awash with competing predictions about the impact of Brexit but the almost universal consensus of economists and property professionals is that leaving Europe will have an effect on transactional activity levels in the UK property market, at least in the short term.”
He said that, while we are now entering an extended period of uncertainty while the government spends time negotiating its exit from Europe, some more optimistic commenters predict that, after a short term dip, the UK property market will thrive.
He added: “We should not lose sight of the fact that the UK is an incredibly resilient and adaptable economy and it is difficult to see how the City of London will not continue to remain as one of the leading financial centres of the world. The UK is also a major focal point for the technology industry and companies exposed to this sector are much less likely to be affected by the implications of Brexit.
“So all is not doom and gloom – the English legal system and the transparency of the UK property market will continue to be the envy of the world and it is difficult to see why international capital will not continue to find its way into the UK property market after an initial period of reflection and evaluation.”
Ashurst real estate partner Hugh Lumby, said: “Brexit does not mean that Britain is simply cast adrift. The terms of Britain’s exit must now be negotiated and this could take up a number of years. During this period of uncertainty we may well see a decline in overseas investment into the UK real estate market.
“If Brexit triggers an economic downturn then occupier demand will inevitably fall which will have an impact on various sectors within the real estate industry. However we can be sure of one thing, the EU will continue to have a major influence on Britain despite the fact that we are no longer in the club.”
Planning and environmental law
Martha Grekos, head of London planning and infrastructure at Irwin Mitchell, said that the EU does not tend to legislate in the area of planning law, leaving this to the individual member states, and so European law has a comparatively limited effect in relation to development regimes across the UK. However, where EU law has a greater effect is in the area of environmental protection.
Once the UK is no longer a member of the EU, regulations and treaty provisions would no longer apply and Grekos said: “It is possible that policies in different parts of the UK will diverge even further than they do currently because if any part of the UK wanted to make any legislative changes, these would need to be made by each of the individual constituent parts of the UK. This in turn could make compliance more difficult for businesses operating in more than one part of the UK”.
She added that we will still be affected by EU policy that we are no longer able to shape at the negotiating table: “The UK could be faced with an odd position that it would have to mirror the EU protections without having any power or a say in their development.”
“If UK businesses wanted to trade with the EU, any goods exported to the EU would still have to comply with EU environmental standards. And most importantly, if the UK joined the EEA or EFTA, the UK would still have to sign up to most of the EU’s environmental laws because those laws also affect the functioning of the single market.”
Grekos continued: ” The true impact of planning and environmental law and policy will only become clear once negotiations are underway and the future legal relationship with the EU will govern the extent to which the UK must continue to comply with EU environmental laws.”
However: “For now what is known is that the uncertainty over the process for exit could well impact on decisions in the property market as the perception of risk attached to the UK is heightened. Some investors will hesitate and some occupiers will re-plan their footprints and building pipelines may slow down. That said there are always some who use uncertainty to their advantage and it will not be the first time the property industry has taken advantage of market change. It will be interesting times ahead.”