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Sector experts are warning of a house price slump, an inadequacy of stress testing amongst RPs in connection with a fall in house prices, funding becoming more expensive, and questioning whether housing policy, heavily geared towards home ownership, is fit for purpose, writes Croftons' Managing Partner, Simon Leighton.
I can readily understand how the London housing market, which has been heavily underpinned by massive international investment and huge city salaries, could be affected. As for other areas of the country, which have not had the “benefit” of these drivers affecting the Capital, I am yet to be persuaded that we will see much more than the odd jitter with house prices.
Whilst there are concerns for house prices emanating from both confidence and the banks’ position on funding, recent mortgage applicants will know well that the process of obtaining a mortgage has already become far more rigorous over recent years. Also, we have the possibility of a drop in base rate from as early as this week, and I find the Governor of the Bank of England’s statement last week hugely re-assuring: “We have a clear plan, we are implementing it rapidly, and it’s working”. In many areas, I’m not convinced we will see much effect on house prices.
It is tempting for some risk averse housing organisations to sit on their hands to wait and see. Whilst I can understand the attractions of pressing the pause button, and I do believe it’s wise that we all take stock of the merits of our development plans and other schemes, I do believe there is a real danger that we sit on hands for too long.
I recognise full well the democratic decision we have made, yet I struggle to reconcile this with the legal position required for the UK to exit. Parliament authorised entry into the EU by passing the European Communities Act 1972. The UK government, issuing notice under article 50 of the Lisbon Treaty, would have the effect of over-ruling the 1972 Act. It is argued that the government can invoke the use of Royal Prerogative to issue notice under article 50. Historic case law confirms that an act of Prerogative cannot override and Act of Parliament.
The only legal, or constitutional, way of over-ruling or amending an act of parliament is to pass another act of parliament. I understand that many MPs would not vote to support the requisite legislation. I can recall numerous occasions where it would have been convenient (and desirable) to make an expedient decision purely on the facts of that matter (eg regarding the deportation of known terrorists), but the rule of law has been upheld. It is my view that we cannot safely depart from the rule of Law. Legal challenges are being intimated over this issue, which could delay the process or ultimately succeed. How long could that take?
EU leaders are understandably irritated by the UK’s decision and therefore changing the EU rules on the back of the UK decision will not be high on their agenda. Other EU member states also have frustrations with aspects of the EU, though. In the two year window post article 50 notice, when we are re-negotiating our international relationships, will other member states not deem it bizarre that we will be re-negotiating our entry into a free trade framework that we are about to leave, and will they not consider the possibility of reform to keep us together?
Of course, none of us know the future. We do know that the demand for good quality and affordable housing remains a major issue for many of our communities. If we wait for greater certainty, we could be waiting a long time and consequentially, let down the communities in which we operate and serve.
Croftons is the trading name of Croftons Solicitors LLP, a limited liability partnership registered in England and Wales with number OC343375. The term ‘partner’, if used, denotes a member of Croftons Solicitors LLP or a senior solicitor of Croftons Solicitors LLP with equivalent standing and qualifications. A full list of members is open to inspection at the office. Croftons is authorised and regulated by The Solicitors Regulation Authority (SRA) number 508041. Croftons has its principal place of business at The Lexicon, Mount Street, Manchester, M2 5FA.