Legal conveyancing: foreign investment in the property market and the effect on the legal industry
by Heat Recruitment
By Dan Hazzard
As the date of our official exit from the EU draws closer and the chance of a ‘no deal’ scenario starts to become a real possibility, headlines aren’t exactly painting a post-Brexit Britain in a particularly favourable light.
Fortunately for our property market, an unprecedented surge in overseas interest has helped to soften the blow.
GBP’s reduction in value against foreign currencies has certainly sweetened the appeal for opportunistic property magnates from overseas. On the morning after the referendum, Guy Gittins of international property agency Chestertons, spoke to the head of a Middle Eastern bank who requested a list of properties available for sale. A month after the Brexit vote, the estate agency found that: “A £1m house had become about £100,000 cheaper for those buying in Roubles, Yuan, Euros, Yen or Dollars”.
Amidst political and economic uncertainty, foreign investors are seizing the opportunity of an open market to go on a property shopping spree. With the influx of interest coming to the UK from abroad set to continue, it looks like we could finally be in line for some good news. Perhaps ironically, a weakened pound has brought about a boost in demand that our world-renowned property market will undoubtedly benefit from.
Navigating new landscapes
Regardless of how we leave the EU; no matter the deal we do, or do not, manage to secure, Brexit by its own nature means increased regulatory complexity. Having to unpick 40 years of EU legislation and adjust our own laws accordingly will prove a mammoth task. As it stands, the United Kingdom does not currently have a domestic legal framework surrounding inward foreign direct investment, nor does it have an official policy distinction between domestic and foreign investment in the UK. This will undoubtedly increase the need for conveyancers in the future.
While the Prime Minister may have emphasised the government’s intention to keep the country ‘open for business’, it has also been made clear that certain foreign takeovers will be subject to much greater scrutiny in the future. Navigating this new landscape will therefore require hands-on expertise from specialist property lawyers who can oversee the transaction to completion with ease.
The post-Brexit conveyancing market
While there remains uncertainty surrounding the conditions of our exit, it’s clear that Brexit will have implications for the financial and regulatory frameworks that govern the UK property market.
Where economic confidence and access to European markets once held London as a hub for commercial property investment, initial studies indicated that Brexit could cause a significant drop in demand from both domestic and overseas companies. Yet, in the face of fear-mongering headlines, investment in UK commercial property has soared since the referendum. According to property according to data from the CBRE real estate group, Chinese investors spent 3.96 billion pounds on London commercial property in the first six months of 2017 – the highest amount on record.
While Brexit may have thrown a proverbial spanner into the works, demand for residential property remains high. In fact, research suggests that residential instructions to property lawyers in London trebled in the week after the Brexit vote as buyers from Nigeria, USA, UAE, Russia and China took advantage of the exceptionally low exchange rate to snatch up a bargain or ten.
Despite the direction that UK/EU negotiations have taken, predictions surrounding the health of the property market post-Brexit if recent figures from UK Finance are anything to go by, mortgage lending is on the rise and hopeful newcomers are finally getting their first foot on the property ladder.
According to their findings, the number of first-time buyer mortgages has risen 14% since 2016. If the outcome of ongoing negotiations sees this trend continue, conveyancers can un-cross their fingers at the prospect of a slump in demand.
With property investment comes the need for skilled conveyancing solicitors to manage the deal. In the short-term, the increase in activity could potentially see a rise in fees shareable for conveyancing departments. If you’ve just graduated and are looking to kickstart your legal career in conveyancing, you’re in luck. As investment ramps up, you’ll be a hot commodity in a buoyant market.
Similarly, both residential and commercial property lawyers well-seasoned in practice should find themselves spoilt for choice when browsing the jobs market.
At Heat Recruitment, we’re experts in the conveyancing sector. The huge increase in foreign investment poses a strong opportunity for specialists in the area. If you’re looking to make a career change or are looking for top talent to bolster your conveyancing practice, get in touch with Heat Recruitment today!