Investors are adding a ‘Brexit clause’ on property deals depending on vote in 1 month
City law firm Nabarro said on Friday that commercial property investors were adding “Brexit clauses” to contracts that will allow them to pull out of deals if the UK votes to leave on 23 June.
Residential developer Oakmayne Properties is launching 42 apartments in Two Fifty One, a 41-storey building in the middle of the Elephant and Castle redevelopment in south London, at an event at the Shard.
Prices start at £655,000 for a one-bedroom flat and buyers who put down a £2,000 reservation fee will be able to get the money back if they are unhappy with the referendum result.
David Humbles, the Oakmayne managing director, said: “Buyers will not be required to exchange contracts until after the vote. If they don’t like the result, whichever way it goes, they will have the right to withdraw and have their reservation fee refunded in full.”
Howard Archer, the chief UK economist at IHS Global Insight, said he expected the market to be quiet in the runup to 23 June.
“I think the market will be subdued until the referendum and will pick up after that if we vote to stay,” he said. “If we vote to leave, I am pretty pessimistic about the housing market … there will be a shock and I think the market will stay pretty weak for some time after that.”
Britain’s biggest listed property developer, Land Securities, responsible for the Walkie Talkie skyscraper in London and retail spaces such as Bluewater in Kent and Gunwharf Quays in Portsmouth, said this week it had sold more than £1bn of its assets because of growing risks to the UK market, including the chance of a Brexit vote.
Its chief executive, Rob Noel, said a leave vote would lead to “falling rental values and a reduction in construction commitments, particularly in London. An exit could be painful for the property industry and those it supports.”