As the results came in on Thursday evening I had just arrived in Spain with girl friends for a few days of sun and given the weather on Thursday which sent the south east into chaos who could blame us!!!
When we returned to our apartment after a lovely supper a friend text me the sky poll which we thought read the results that we were staying in, which gave us a further excuse to head to a bar for a night cap to discuss in more detail. Well you can imagine our shock when we discovered it was the other way around. The fuzzy heads soon disappeared and the element of shock and sadness that it was official the UK had started divorce proceeding against the rest of Europe.
Like any major change in your life, once you receive the news an element of panic and chaos sets in. There does need to be a period of reflection to see what happens rather than running around like a headless chicken. As a commercial property lawyer I am concerned how Brexit will affect my clients and I have been following the markets closely. It was no surprise that the pound and FTSE fell, nor is it a surprise that our credit rating was reviewed given the uncertainty that is now upon us. Having worked through one recession I don't want to think that doomsday is to fall upon us soon. When speaking to my clients next week they will want some reassurance, but what can I tell them?
(1) Residential Property
Many of my clients are worried that their house value will fall. There is likely to be a change but who knows what this could be. Property experts were suggesting a range of 5-15% and with a range as wide as that, I think we will just need to wait. In truth for the larger properties we have already seen a drop and a slow down in the market due to new stamp duty levels. For properties in London reports are suggesting that given the pound is weaker you will see a rise in investors from overseas.
(2) Commercial Property
The reports I have seen have suggested that commercial property could be a sense of stability for markets to invest in. Real estate yields are a reliable source of growing income in an otherwise low interest rate state.
Many clients may be worried about their mortgages and whether these will go up. This will all depend on whether interest rates will be increased. The Governor of the Bank of England Mark Carney has already discussed the difficulties policy makers have and that there is a challenging trade-off between boosting growth by cutting interest rates or keeping a lid on inflation by tightening monetary policy.
Up or down it is difficult to know which way the governor will go There are many reports suggesting negative interest rates as a possibility. I think we will need to wait and see. Before the polls the treasury had claimed that Brexit could add a further £350 a year to the average home loan.
So my advice to clients at the moment would be to sit tight and wait to see what happens over the next few months. There is no reason to panic and until an exit plan has been formalised there will be an element of uncertainty in the air.