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Possible effect of Brexit on conveyancing

On June 2016, a majority of the UK voted for withdrawal from the European Union. This implies that the UK will at some point not be influenced by rules, regulations and policies of the European Union. The impact of this decision is expected to affect all sectors of UK economy. The effect of Brexit on conveyancing is borne by those in both the real estate and financial sector. This is because conveyance involves the interplay of financial institutions and real estate development. Solicitors are also affected because they are important stakeholders in the conveyance.

For a member of the EU to ultimately withdraw from the EU, he must apply for eviction. The withdrawing, member as well as other members of EU then draw a withdrawal agreement. It takes two years for EU members to come up with a withdrawal agreement. If after two years the agreement is still not drawn, the members can ask for more time or by default allow the applying state to withdraw its membership. Request for extension of the fixed two-year period is made through voting. If more members of EU vote for the extension, then the duration of withdrawal agreement is prolonged.

Brexit is a rather new concept. The precise consequences of Brexit are still not easy to predict. Most economic experts suspect drastic changes in various economic sectors of the UK. The value of the pound has dropped since the UK voted for Brexit. A further decline in the value of the pound is expected. The decline in the value of the pound affects property markets. With pound continuously plummeting in value, the real estate market is expected to contract. Many experts predict a drop of 5-10% in property prices. With properties attracting less revenue, sellers will be unwilling to put their properties for sale. Those who are in the process of conveyance may ask for termination of the transaction.

Many people are expected to buy property due to the low property prices. Both UK and international buyers are expected to flood the real estate market. The UK trade regulations do not allow foreign real estate investors to exceed a given number. This means that local property buyers will stand a higher chance of purchasing real estate. Forces of demand and supply may eventually increase property prices to a value that is agreeable to both buyers and sellers.

The falling value of UK pound will increase the cost of importation of goods, especially from countries that are more economically stable than the UK. Prices of imported cars, refrigerators and farm equipment will be high. The cost of travelling to economically superior countries will also increase. All these are expected to induce public outcry for adjustments in bank interest rates. Increased interest rate increases the cost of mortgages and eventually the cost of properties.

The European Union has no direct control of rules that regulate insurance in the UK. Individual state laws regulate conveyance. Nevertheless, EU policies have general effects on how properties are managed. Energy laws of the EU stipulate that tenanted properties must have level E energies. Freeholders who are intending to rent their properties must adhere to this policy and any other EU policy that affect regulate tenancy. Exit from EU may change EU policies. The nature of these changes will be apparent when withdrawal agreement come into place.

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