The EU Referendum (and the UK Housing Market): Vote Stay. Or Leave... Wait, I'm Confused. Which One Is The Least Worse?

George Osborne has today told us that leaving the EU will result in house prices falling. His rationale is that Brexit would lead to higher interest rates and therefore escalating mortgage costs thereby reducing demand for housing. Prices will fall accordingly.

There have been many, many prophecies of doom relating to things that 'will happen' if we leave. And indeed if we stay, as peddled by the other side. So, as this EU debate thing hots up I started to wonder at, no matter what my personal views on 'in or out' are, the possible implications that staying or going could have on homeowners.

Being an estate agent I have a vested interest in commentating on such things so I've done some pretty extensive research over the past few days via a number of resources including HM Treasury; EUR-Lex, (the website that details all European law and directives); The Daily Mail; and, for balance, The Guardian.

The best way to try to summarise what I've discovered is to set out this article in two sections... what happens if we vote to stay and what happens if we vote to leave. These will all definitely happen if we stay/leave.

Voting to stay

Voting to stay ensures that the UK remains bound to EU directives and which make up a large proportion of UK law. EU policy is created by the 28 European Commissioners, one representing each member state; plus the Council of Ministers and then rubber stamped by the European Parliament, the latter being the only (sort of) democratic part of the process.

Searching recent and upcoming directives for property related diktats that would be binding on us yields a whole host of interesting discoveries. Here are five highlights:

1. The aversge market rate for estate agency fees across EU member countries is 5% of the sale price of each respective property sold. France and Portugal have the highest rates (8%) with the UK amongst the lowest (2%). The 28 member states will be made to regularise estate agency fees based on this EU average so that those home owners selling in the UK, for instance, do not have 'financial advantage compared to the remainder of property sellers in other member states'. In other words, selling fees in this country will be compelled to rise to 5% of sale price (plus vat of course) if we opt to remain a part of the EU.

2. The UK also has the most agile housing market. It is buoyant due to it's propensity for prices to race upward. This makes for long term strength but volatility here and there whereas our continental cousins do not have to contend with the roller coaster as we do. Most countries, notably Germany in particular, the matriarchal leader of the EU, quashes such injustices by ensuring that 90% of their citizens rent their homes long term. Thus remaining a part of the EU will, the experts say, put pressure on the autocrats to impose price caps on British house prices. It's just possible that home ownership itself may be limited to those whose surnames begin with certain letters of the alphabet in order to limit demand and consequential overheating. Compulsory renting for the others.

3. The EPC (Energy Performance Certificate) was imposed on domestic householders due to an EU directive. Its purpose was to monitor the energy efficiency of European wide housing stock. However since 2010 when the law was introduced here that all properties marketed for sale must display an EPC, only 30% of housing stock has been assessed. Hence it is probable that EU housing inspectors will be given authority to enter your home and check it's environmental credentials. Even if you are out. Or in the bath.

4. Planning decisions are currently made by local councils using a Government template known as the National Planning Policy Framework which, in effect, tells locally elected people how they must make their own local decisions. It's called 'localism'. Unfortunately, successive governments have failed to oversee the building of enough homes despite 'localism' and therefore Brussels is set to step in to cure the current housing deficit of the 70,000 homes per annum that are not built but are sorely needed. Fortunately, Italian bureaucrats are renowned for merrily doing what they like without interference and therefore it follows that Italian Town Mayors will be well placed to make the final decision on whether a new housing estate is built on the meadow opposite your home.

5. The French already own most of the water, gas and electricity companies in the UK. Which places them in a great position to force every British homeowner to only buy their energy from one, French supplier in future. In Euros of course. 

And what if we leave?

1. Well, as George Osborne states, it is absolutely definite that interest rates will rocket overnight, mortgages will become at least twice as expensive and house prices may drop by as much as 100%. This is bound to happen, he says and as do some experts that he has employed to say so.

2. Continental tourists will not visit the UK ever again. This means that all second home owners that rent out their properties AirBnB styley will have no holiday tenants, no income and so their homes will ultimately be left derelict.

3. We will no longer be able to export any British made goods or services to France, Germany, Italy, Portugal, Spain, Eastern Europe etc. All of a sudden no one will want our cars, clothing, food, technology or professional expertise. This means that the economy will fail and all of us will have our homes repossessed because none of us will have jobs. At all.

4. The City of London will close. No EU based bank or corporation will want to trade with our banks or buy or sell our equities. Or the pound. Millions of people that rely on financial services for a living will be surplus to requirements with the resulting effect that they will all be compelled to sell their homes therefore putting further strain on the housing market. All mortgages will be called in.

5. Farmers will no longer be able to claim millions in subsidies and will have no choice but to sell their land to housing developers further fuelling supply whilst demand disintegrates. House prices will fall into negative territory whereby home owners will have to pay buyers to rid them of their burden.

You can see that voting in or out are equally as likely to result in armageddon, according to the experts. Yet not voting at all means that we'll end up staying which, in turn, is just like voting to leave and which you may not want to do. Hmmm...

If you are a homeowner or you want to be. Or you live in a house, flat or bungalow, things are set to be rough for you no matter what happens.

As the EU remain/leave arguments become ever more compelling and confusing (and ridiculous) I'll certainly be watching closely to help me make up my mind. 

Or things might just stay exactly, totally the same. I'll leave you to ponder if that might just possibly be the case. Do bear in mind in doing so of course that the 10 suppositions that I've set out above are completely made up but inspired by some of the ludicrous prophecies advanced by both the leave and remain camps in recent weeks. Unfortunately, I suspect the scaremongering has only just begun in this debate.

Next week: How leaving the EU means that all cheese will be banned. Probably.