BREXIT & DEVELOPMENTS IN VALUER’S LIABILITIES Imran Benson Brexit In the run up to the referendum the mood about the consequence of a leave vote was, from an economic point of view, pessimistic. It was said that a decision to leave would prompt an economic downturn and put pressure on the pound, inducing an increase in interest rates to dampen ensuing inflation: arising out of that heady mix, a recession would cause a devaluation in house prices. That, of course, is bad news for lenders who begin to suffer losses and look to recover such losses from professionals, such as valuers. Indeed, market uncertainty after the referendum caused many of the largest firms of valuers to agree that they would all insert language in their reports to warn clients that the market was in an uncertain state because of Brexit and that valuations should be judged against that background. Some 4 months later, where are we? The has fallen, but so have interest rates and the Governor of the Bank of England has indicated that he is content for inflation to rise a little. Moreover, the latest CML figures show that house loans are still being made albeit perhaps in slightly subdued numbers. It seems that real change has been not Brexit induced, but instead the change in stamp duty in April of this year which added 3% to second home purchasers, causing a spike in BTL purchases in the first quarter of this year. Remortgages remain high and growing, and remember the growth there, since this may be a source of claims in the future. Further, the latest RICS survey of several hundred agents reports low supply, continued demand and increased prices almost everywhere apart from Central London. Central London seems to be the only relatively bleak spot. Valuers and risk partners at the major firms often tell me that developers lament the various tax changes which are dampening demand in prime London markets. They point to stamp duty which is now 12% on prices above £1.5m, the enveloped dwellings charge, which attempts to prevent stamp
BREXIT & DEVELOPMENTS IN VALUER’S LIABILITIES Imran Benson Brexit In the run up to the referendum the mood about the consequence of a leave vote was, from an economic point of view, pessimistic. It was said that a decision to leave would prompt an economic downturn and put pressure on the pound, inducing an increase in interest rates to dampen ensuing inflation: arising out of that heady mix, a recession would cause a devaluation in house prices. That, of course, is bad news for lenders who begin to suffer losses and look to recover such losses from professionals, such as valuers. Indeed, market uncertainty after the referendum caused many of the largest firms of valuers to agree that they would all insert language in their reports to warn clients that the market was in an uncertain state because of Brexit and that valuations should be judged against that background. Some 4 months later, where are we? The has fallen, but so have interest rates and the Governor of the Bank of England has indicated that he is content for inflation to rise a little. Moreover, the latest CML figures show that house loans are still being made albeit perhaps in slightly subdued numbers. It seems that real change has been not Brexit induced, but instead the change in stamp duty in April of this year which added 3% to second home purchasers, causing a spike in BTL purchases in the first quarter of this year. Remortgages remain high and growing, and remember the growth there, since this may be a source of claims in the future. Further, the latest RICS survey of several hundred agents reports low supply, continued demand and increased prices almost everywhere apart from Central London. Central London seems to be the only relatively bleak spot. Valuers and risk partners at the major firms often tell me that developers lament the various tax changes which are dampening demand in prime London markets. They point to stamp duty which is now 12% on prices above £1.5m, the enveloped dwellings charge, which attempts to prevent stamp
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