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It's happened. The UK has, in the majority, voted to leave the EU. What wasn't quite so predictable was the resignation of the Prime Minister. So what now? A Tory Party leadership race throughout the summer and new Prime Minister by the autumn.

After a long, hard fought and sometimes bloody battle the metaphorical war has been won. Some would say by dye in the wool old fogies whose heads were firmly fixed in the sand and the twentieth century, whilst others that Brexit voters were the brave pioneers, the backbone of what the British Isles was founded upon.

What impact will this have on the property sector? Initially the markets plummeted and Sterling dropped against the US dollar. While 'nobody knows' is a phrase that may be heard often over the coming months and years, in truth the following is still speculation, researched, gathered and repeated comment from property pundits over the past months; but it may help to give a broad overview of what might happen in the near(ish) future.

However, what everyone agrees upon is that uncertainty reigns.

In the months running up to the referendum we saw a change in areas of the property sector that may have been a flash in the pan but could herald a permanent change.

Some of the larger institutional investors held back from committing to sizeable commercial purchases, which provided a window for smaller investors to gain a foothold in London and other major cities around the country.

In referendum week, Rightmove reported that the residential housing market achieved a milestone in May 2016, with properties selling in an average of 57 days – the fastest time recorded over the previous twelve months.

Once things have quietened down, the supply and demand aspect of the home-grown domestic property market suggests there may be little or no change post Brexit. People in Lincolnshire will still buy and rent property and so the merry-go-round will continue. Of course if interest rates go up it will make life tough for those who did not factor in rate increases when they took out their mortgage.

Investors in buy-to-let property already incorporate the affects of additional stamp duty on second properties and

the phasing out of mortgage interest relief (due to begin in 2017). In order to gain from more beneficial regulations, many serious investors have converted their private holdings into businesses.

London is an anomaly. The top end of this particular market has been shaped by foreign investors - often buy-to-leavers, who purchase with confidence of an ever-increasing return and a safe haven for their money - but in the past few months it has seen prices fall as fewer buyers fight for their piece of the golden goose.

Many may welcome this slowdown and view it as an adjustment to an overheated market. Wealthy Europeans may no longer chose to invest in the London Property market - but then again they may come back in their droves – nobody really knows?

The property sector has always been influenced by the economy in general and uncertainty is not a climate in which to make major decisions, so the outcome of our exiting the EU will be dependent upon how inventive we can be as a nation to 'go it alone'.

We must all remember that property is a long-term investment and that prices can go down as well as up. Whilst there may be a short-term shock to the sector, over the medium and longer-term prices and yields will adjust and it is supply and demand that drives the property market.

In amongst all the uncertainty, and in the run-up to the vote, Société Générale confirmed that it was signing on a further 8,000 square feet at its current site in St James Square and is committed to a new and larger Canary Wharf office with a move-in date in 2019.

Banks still need to lend and businesses and individuals still need to borrow. In London developers may decide to build for the home market rather than overseas investors; in the rest of the country there may be an easing of bottlenecks caused by the Freedom of Movement of Workers, which is a fundamental principle of the Treaty enshrined in Article 45 of the Treaty on the Functioning of the European Union. But all this is speculation.

Who can predict whether or not we will become the go-to country for foreign property investment? Add to that the attraction of a country on the doorstep of Europe and not bound by the red tape of numerous regulations? Nobody knows.

We will survive.

Direction Posts

Finalists in the 2019 Kent Excellence in Business Awards (KEiBA) were announced on 7th May. The judges arrived at their shortlist following a difficult and incisive elimination process that included visiting a large number of companies that had entered this year's awards.

Caxtons, sponsor of the Start-Up of the Year category, is delighted that the three companies in the running for the award are:

My Career Options
a simple online assessment to determine skills and abilities, then signpost students, careers advisers and parents to possible careers they may not have considered

Orchard Pods
a small glamping bed and breakfast enterprise on a working Kentish cherry farm

an online DIY video production portal that provides all the professional tools to enable companies and individuals to build their own videos within their own control and budget

Marketing & Business Development Director, David Gurton, said 'We really enjoyed the judging process and meeting so many enthusiastic entrepreneurs who have not been deterred by the current political impasse. It is great to realise that there are lots of firms and sole traders who are prepared to put their dreams in to practice.

We now look forward to announcing the winner at the June 20th awards night."

A full list of finalists for the KEiBA 2019 awards can be found here.

KEiBA 2019 Sponsor Logo-01

By Laura O'Donovan BSc(Hons) MA PGDipSurv MRICS, Head of Building Surveying

When taking on a business premises lease, many people are unaware that the building surveyor's role is one of the most important aspects of the property transaction and will safeguard against problems further down the line by limiting liabilities and potentially saving money for the business owner.

Commercial property leases differ from residential property leases and are typically viewed as contracts between 'knowledgeable business people'. Therefore less protection is available for tenants of commercial property than tenants of residential property. There is an assumption that 'knowledgeable business people' should be able to negotiate the terms of the lease accordingly.

Commercial leases are often full repairing and insuring (FRI) leases where all the costs of maintenance and repair, as well as insurance, are the responsibility of the tenant. This can have far reaching financial implications for the tenant who may be unaware of these obligations at the outset.

The building surveyor can undertake a building survey and provide a detailed report on the condition of a building prior to the lease, in order to identify and analyse defects and suggest necessary repairs. The building surveyor can also review the draft lease to provide advice on the extent of the repairing and decorating liabilities, and help the tenant to understand the implications of these covenants as well as advise on an achievable exit strategy when the lease is ending. This foresight could

protect the tenant from considerable costs at the end of the lease as well as limit costly repair works during the term of the lease.

Tenants often sign FRI leases on buildings that are in disrepair believing they can hand back the property in the same condition. We recommend that agreement is sought to append a Schedule of Condition to the lease in order to record the true and accurate condition of every part of the property. The repairing obligations of the tenant can then be limited to the condition of the property at the beginning of the lease. The building surveyor has the skills, knowledge and experience to identify priority areas that would afford the most cost savings in the long term.

Tenants must understand the implications of the lease as a legal document into which they are tied for a number of years, so clients taking on commercial leases would be well advised to consider an appropriate exit strategy which considers the future requirements of their business, as well as their current business requirements. This could include options for subletting, breaking the lease at a specified term or on the occurrence of certain specified events and surrender of the lease.

At the end of the lease term, the landlord or the surveyor will prepare a Schedule of Dilapidations in order to establish the breaches of covenants relating to dilapidations. If the breaches are not adequately remedied by the tenant, the landlord may undertake the work and recover the cost from the tenant. A building surveyor can assist the tenant by reviewing the landlord's claim and negotiating a settlement on the tenant's behalf.

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Laura O'Donovan