The uncertainties over Britain's plans to exit the European Union and the impending stamp duty implementation in April are playing tug of war in the U.K.'s property market, Bloomberg reported.
Investors and prospective homeowners rush in to buy properties before the new tax takes effect. This result in an increase in mortgage applications as they try to secure approvals for their borrowings before they face higher taxes. The stamp duty change, which the government crafted with the aim of cooling the country's hot housing market, will add 3 percentage points to second home rates.
Consequently, there is an increasing demand which helped lift sales by 12 percent in February. House prices also rose by 0.8 percent last month as indicated by the data from LSL and Acadata, per Bloomberg.
With the issues surrounding the U.K.'s EU membership, there are also uncertainties as to how the so-called "Brexit" will affect the country's housing market. According to a report from The Guardian, there is going to be a slowdown in the housing market. Savills, an upmarket estate agent, has warned that the sector will be subdued in the run-up to the EU vote in June.
"We expect the UK residential and commercial investment markets to be subdued, for the former, as stamp duty reforms take effect, and, more generally, in the run-up to the EU referendum in June," said Jeremy Helsby, Savills chief executive.
If Britain decided to renounce its membership from the European Union, property investors might delay or cancel their investments while companies might postpone leasing offices in the country.
Asset manager BlackRock has also warned of Brexit's impact, saying, "Investors in London's commercial property market are understandably nervous about the Brexit vote. London has a lot to lose. It accounts for 23 percent of European cross-border commercial property investment."
