Article 50 date delayed: Impact on UK property & investment

Article 50 date delayed: Impact on UK property & investment

Government sources say Article 50 trigger date will be delayed until the end of March, as financial markets brace themselves for speculative moves.

Summary:

  • UK PM Theresa May is expected to push back the date when she invokes Article 50 until the end of March
  • Downing Street sources announced the delay just hours before Parliament passed the Brexit bill, enabling the government to officially proceed and notify the EU of Britain’s wish to leave the single market
  • Speculative moves are expected to cause fluctuations in currencies and equities markets when this happens, underlining the uncertainty high-risk assets like these face in 2017

(Editor’s update: Theresa May confirmed on March 20th that she will officially trigger Article 50 on Wednesday March 29th. Read our full feature here on what it will mean for your investments).

 

The UK government will delay triggering Article 50 until the end of March.

That’s according to sources at Downing Street, who have indicated that Prime Minister Theresa May is now likely to wait until the last week of the month before she invokes the clause, officially notifying EU leaders in Brussels of Britain’s intention to leave the single market.

Having initially expected to trigger Article 50 on Wednesday (March 15th), the discussions in both the House of Commons and the House of Lords over the terms of the final Brexit bill in the last fortnight, outlining the intricacies of the country’s EU withdrawal, have prompted the government to hold off.

On Tuesday (March 13th), Parliament passed the bill and it will now become law next week, leaving the Prime Minister free to notify the European government of Brexit.

Investors around the world have been waiting for the Article 50 trigger date for months. Since the EU referendum in June, stock markets have been mired in volatility, with every new announcement and news headline seemingly prompting traders to make knee-jerk moves, such is the unprecedented nature of a major nation withdrawing from the Union.

And it’s expected that financial markets will take a further hit when Mrs May invokes Article 50 and officially begins Brexit negotiations, yet again caused by traders making reactive moves to the uncertainty.

While it will further underline the volatility high-risk assets such as equities are likely to face in 2017 (and throughout the two-year period of Brexit talks), it will also highlight the importance of adding safe-haven assets such as UK property to investment portfolios.

Bricks and mortar are likely to be unaffected by Article 50. Such is the critical undersupply of UK property at a time of rising demand, performance is not expected to feel the same impact as equities and gilts when Mrs May invokes the clause.

Both average property prices and rents are expected to grow over the next few years, with any further loss in value of the pound further understating the immediate investment opportunity in British real estate for international investors.

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