With the triggering of Article 50, momentous political times are underway. The Brexit impact on the UK‘s property market is still unknown, but it is undeniable that it will be tangible. While many analysts try to predict the repercussions on house and real estate prices, it might be wiser to look at the bigger picture.
UK housing law is set in the EU context
Despite the fact that the European Union has no direct competence in the field of housing, many of the UK’s housing and real estate-related policies such as energy efficiency, technical building standards, mortgage credit and consumer policies – to name a few – have been implemented in the context of EU legislation. Yet, the future might be uncertain in these policy areas. While a full roll-back is not feasible, the UK government may choose to loosen up some of the existing requirements and measures originating from EU once it has negotiated its exit. Nothing is certain and might very well depend on the result of the upcoming general elections and political priorities.
The four freedoms of the Single Market
One thing is sure though, exiting the EU will directly or indirectly impact basic freedoms and privileges of EU membership. Real estate experts indeed agree that the four freedoms enshrined in the Single Market are all vital to property, even if they are not recognised as such by real estate professionals, let alone individual property owners who have no intention to invest in properties abroad.
The right to free movement of capital guarantees the freedom to buy and sell real estate properties anywhere in the EU without any obstacles or additional red tape. The free movement of services enables real estate and construction professionals to practice across the EU – with or without establishment and with mutual recognition of qualifications – and to post workers abroad. The free movement of goods enables free circulation of products. As for the fourth, the free movement of persons, it gives any citizens the right to live in another EU country and creates an open construction labour market framed by EU workers’ rights and easy access to foreign workforces.
Will Brexit put an end to these freedoms?
Again, all will depend on the negotiation outcomes. Nonetheless, distortion cannot be excluded: Free movements of capital might remain unchanged, but direct or indirect obstacles to property purchase, possession or transfer, in the form of preferential tax treatment, control over access to land, complication in succession matters, etc. might arise. International rules on goods may be enough to replace the advantages of EU tariff-free trade for construction products and house appliances, but non-tariff barriers, such as standards or health, safety and environmental norms, may occur due to legislation growing apart.
As for the two other freedoms, the free movement of workers and services, some might see a benefit in having the EU basic labour and social standards potentially no longer mandatory in the UK or in having UK certified and qualified professionals and services, while others will deplore the reduction of real estate-related service providers and the number of European qualified craftsmen and access to other workforces.
Single Market principles are just the top of the iceberg of the 20.833 EU laws and rules which, according to the European Parliament, will have to be scrutinised. With this in mind, no one can deny that the upcoming two years of negotiations, and probably the following decade, will be interesting.
This guest blog was written by Emmanuelle Causse, Director of European Affairs at the International Union of Property Owners (UIPI).