How will No deal Brexit affect real estate finance transactions?

How will No deal Brexit affect real estate finance transactions?

What will be the impact of a No deal Brexit on real estate finance transactions? Mark Lewis, head of property finance at Browne Jacobson, examines the implications. 

What impact would a No deal Brexit have on the real estate finance market?

The residential and commercial markets are already experiencing a slowdown with the threat of a recession also hanging over the economy. In particular, there is a significant slowdown in development and investment, and it is anticipated these sectors will come to a grinding halt for a period of time should a No deal Brexit take place.

Contrast this with the strongly performing shed sector which I expect will continue to perform strongly in the short to medium term due to the need to stock pile to replace just-in-time supply chains. Funding options are not expected to close in this sector in the short term.

The challenger banks are expected to be busier with a No deal Brexit. The market commentators are predicting a fall in property values for both residential and commercial property. A fall in property values will test current loan to value (LTV) covenants and investors approaching a breach of their LTV covenants will likely need to seek alternative funding with higher LTV covenants which will be at higher cost.

I would expect Homes England to fill any funding gaps for housing developers if there is a squeeze or withdrawal of development finance for housing.

What preparations is the real estate finance market making for a No deal Brexit?

We have seen the small to m

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About the author:

Meet Suzanna:

1. Banking and finance lawyer with experience in real estate finance, trade finance and aviation finance

2. Likes skiing, comedy shows and listening to live music

3. Thinks the law is not for the fainthearted

Suzanna has wide-ranging experience in banking and finance transactions with particular emphasis on advising lenders in the context of real estate finance and trade finance, and advising on ECA supported aviation finance transactions. Suzanna qualified as a solicitor in 2001 with Theodore Goddard (now Addleshaw Goddard LLP) and has since gained experience with Barclays Bank PLC, ECGD and Crédit Agricole CIB before joining LexisNexis.