At 7pm on Wednesday 14th November 2018, UK Prime Minister Theresa May announced that her Brexit deal had won the support of the majority of her cabinet after a five-hour meeting.
Opposers to the deal, including conservative back-benchers and infamous Brexiteer Jacob Rees-Mogg, are claiming that it’s not a hard enough Brexit and the UK will still remain firm in pursuing a harder Brexit deal as Dominic Raab, Brexit Secretary, and Northern Ireland minister, Shailesh Vara, have both resigned today in protest over the proposed Brexit deal.
The Brexit deal announced by May will see that the UK will commit to remaining in the EU’s customs union temporarily until a trade deal can be struck between the bloc and the UK, and the issues surrounding the Irish border are fully resolved.
Theresa May’s cabinet was split on the agreement to the Brexit deal and the conservative party, on the whole, are also divided. Jacob Rees-Mogg has urged Tory MP’s who are in favour of a hard Brexit to vote down the MP’s Brexit deal when it is announced in parliament today. Labour leader, Jeremy Corbin, has also expressed his concerns over the Brexit deal, which has put pressure on the PM’s position.
In Mr Raab’s resignation letter he said: “I cannot support the proposed deal for two reasons. First, I believe that the regulatory regime proposed for Northern Ireland presents a very real threat to the integrity of the United Kingdom.”
“Second, I cannot support an indefinite backstop arrangement where the EU holds a veto over our ability to exit. The terms of the backstop amount to a hybrid of the EU customs union and single market obligations.”
However, the City of London’s financial and business chief executives are in favour of May’s Brexit deal, which was published in the Outline Political Declaration on the Future Relationship, alongside the 585-page Draft Withdrawal Agreement last night.
The commitment to remain in the EU’s customs union until a deal can be struck over the Irish border is set to have a knock-on effect on the wider UK economy and property market if it goes ahead.
How the UK finance and business world responded
In the seven-page Political Declaration document, therein outlines the commitments between the UK and the EU to “preserving financial stability, market integrity, investor protection and fair competition, while respecting the parties’ regulatory and decision-making autonomy.”
This document includes a request for “close structured cooperation on regulatory and supervisory matters, grounded in economic partnership and based on the principles of regulatory autonomy,” as well as a request to permit the free movement of capital and payments to be included in an “ambitious, comprehensive” plan for trade in services that goes beyond the basic World Trade Organisation commitments.
This means that according to the declaration document, the UK and EU’s deeply entwined markets will start work straight after Brexit day, which is scheduled for March 2019, to form the terms of establishing an equivalent arrangement to the customs union.
As outlined in the declaration, discussion of the UK’s trade deal will be included in further negotiations leading towards Brexit day and will become a major aspect of the resulting Brexit arrangement.
City chiefs have welcomed this, according to Sky’s Mark Kelinman, who reported last night that both the Chancellor and Business Secretary immediately went from the cabinet meeting to a conference call with top UK CEO’s and city leaders. There was agreement from many of those on the call to support the Brexit deal, resulting in many being keen to lend their support to help “sell the deal” in parliament today.
Throughout the Brexit negotiations, many city leaders and chief executives have expressed concern about the economic effects of withdrawing from the EU’s single market in a hard Brexit deal. There have equally been fears over a no-deal Brexit, which would negatively impact the UK’s economy, businesses, workers and consumers.
Property and the Brexit deal
It is still too early to comment yet on how the wider UK property market will be affected by Theresa May’s new Brexit deal.
However, the support from the UK’s city chiefs and chief executives is a positive indicator that the wider economic impact of a hard Brexit has been reduced or at the very least delayed until further negotiations are announced on Brexit Day in March next year.
There were serious fears raised from EU regulators regarding the potential impact on the EU property market in the event that the UK property market crashed as a result of Brexit. This came after Mark Carney, Governor of the Bank of England, announced that UK lenders had been stress-tested in order to guarantee that they could survive a fall in one-third of UK property prices.
The UK wider housing market has witnessed a slowdown in house prices and mortgage lending across the field in the months preceding the Brexit deal announcement. However, there is one group who have benefitted from this – first-time buyers.
New data released from Chartered Surveyor firm, e.surv’s Mortgage Monitor, found that 67,011 mortgages were approved in October 2018, which is 2.7 per cent higher than the approval figure for September. And the mortgage approval rate increase in October this year is 3.5 per cent higher than compared to October 2017.
The Mortgage Monitor report shows that 24.6 per cent of all mortgage loans were completed to borrowers with smaller deposits, which increased from 24.2 per cent recorded in September this year.
In spite of the base rate rise of 0.75 per cent and the slowing in the UK housing market, first-time buyers are still steadily buying properties and are taking a larger proportion of the mortgage approvals compared to September 2018.
This new data reveals that first-time buyers are benefitting from comparatively affordable mortgages and reduced property prices, to access property ownership which has been out of reach for many in recent years. However, transactions are predicted to fall towards the end of the year as buyers avoiding moving home so close to the holiday season.
Although the wider effects of Theresa May’s current Brexit deal, or a no-deal Brexit, on the property market are largely unknown at the time of writing, there still seems to be some hope for first-time buyers.