Surprisingly Useful:
Our News

How Will Article 50 Affect The London Property Market?

March 29, 2017

Today is a day that will go down in the history books. Prime Minister Theresa May has triggered Article 50, the president of the European council has been notified of the UK’s withdrawal from the EU, and the Brexit process has officially begun.

Here we look at what Article 50 really means, and how Article 50 will affect the London property market.

What is Article 50?How Will Article 50 Affect London’s Property Market?

Article 50 of the Lisbon treaty sets out provisions for how a country can leave the European Union. The short 264 word document doesn’t provide much detail on how the withdrawal process actually works, but it explains that the country should “notify the European Council” and then set out “arrangements for its withdrawal, taking account of the framework for its future relationship with the Union.”

In other words, now May has invoked Article 50 and the European Council have been notified with a hand-delivered letter, we have two years to negotiate the terms of our exit.

What is in the letter?

A letter signed by Theresa May was delivered to the president of the European council at 12.20pm, which has triggered the exit process. Donald Tusk has Tweeted to say it has been received.

When will the UK officially leave the EU?

If this process is followed, Britain will have officially left the EU by April 2019. However, our Chancellor, Phillip Hammond, who was a keen Remain supporter, has suggested it could take up to six years for the UK to finish negotiating our exit terms. Britain’s terms then have to be agreed by 27 national parliaments - so it’s certainly no mean feat.

How will negotiations work?

To be honest, no one is entirely sure. As no other country has ever left the EU before, it has never had to be used - and on top of that, Article 50 was only created in 2009.

Team UK will most likely be led by Theresa May, with the Department for Exiting the European Union also taking a leading role. Secretary David Davis is the minister going into battle to secure Britain’s best exit deal possible, likely assisted by Foreign Secretary Boris Johnson, and they will go head-to-head with Frenchman and chief negotiator Michel Barnier.

David and Michel used to be rival Europe ministers with contrasting visions of the EU in the 90s, so they have come up against each other before. Michel has already warned of the tough stance he will take in negotiations, stating there will no “cherry picking” by the UK of the benefits of EU membership.

How will Article 50 affect London’s property market? How Will Article 50 Affect House Prices?

Mark Lawrinson, Regional Sales Director of Portico London estate agents, has spoken out about the possible effects of Brexit, saying, “I don’t think the triggering of Article 50 will affect the property market directly from today. In one sense it removes the uncertainty surrounding when Britain’s withdrawal process from the EU will start, but in another way it will create economic uncertainty until we know what deal we will strike and therefore what Brexit actually means for our country.

Mark continues, “Brexit will no doubt mean a turbulent two years for the London and UK market as we begin to hear what negotiations and proposed deals are being put forward for our exit of Europe and the single market. I think we will see a continued slowdown or lethargic London market when it comes to sales volumes, and as we reported toward the end of last year, transaction volumes across London are already more than half of what they were before the 2008 crash.

London has a significant part to play in businesses who trade and operate across Europe and the world, and a buoyant property market relies on the UK’s economic health. If Brexit negotiations go well this could cause further price growth as the economy grows and we see the nation’s confidence lifted, but equally, if a good deal isn’t reached then the international companies who operate here or look to relocate here might change their minds, reducing the number of residents who live in the capital and again further reducing the transaction levels, which could ultimately lead to price decreases.”

It’s therefore important that you make property decisions based on your personal situation and what you want to do, rather than gambling on how the market will play out.Instant Valuation

Robert Nichols, Portico’s Managing Director, makes an important point, stating, “Right now we may experience some uncertainty, but as the negotiations progress, we will regain some much needed stability into the housing market, as people realise that the effects of Brexit are not catastrophic and go on with their lives. We’ll hopefully see transaction levels increase as a result, which are currently dangerously low and affecting price growth across the capital.

He continues, “Today’s events are likely to have a much more profound effect on foreign investment however, with the weakening pound expected to fuel demand from overseas buyers and investors.”

Many are also speculating that today’s events will mean that the Bank of England will be hesitant to increase their interest rates, in spite of the recent inflation increase. This will it will remain cheaper than ever to borrow and get on to the property ladder.

For more property updates and news, keep an eye on the Portico blog. Click here for an instant property valuation, or give us a call on 0207 099 4000.

We already know how much your rental property is worth. Type your postcode to find out and get an online valuation within 60 seconds.

Get an Instant Valuation

Special offers from independent local businesses

Find Out More
More Portico Places

Findlay's Pet Care (Battersea)
20% off a wedding package

The French House (Dulwich)
10% off your total food bill

Hasu (Acton)
20% off your food bill

Before you go
Before you go...

Would you like an instant property valuation?

No thanks Yes please