Ultimately, Brexit can go in one of two directions. It can continue to maintain the status quo (or something close to it) or the UK could separate itself from the EU and fend for itself on the global stage. While it is indisputably a small country, much the same could be said of other major economies, many of which are already outside the EU. Maintaining the status quo has the obvious appeal of familiarity and would essentially allow the UK to continue with business as usual, but while the prospect of a hard Brexit may make some people uncomfortable as it is a dive into a situation which, for the younger generation at least, would be a complete unknown, it would also give the UK the opportunity to set its own rules, outside of the EU and compete on its own terms and could wind up being very beneficial for the UK economy in general and the UK property market in particular. Here are five ways that potential could take shape.
Replace stamp duty on property transactions
The government has already tacitly acknowledged that stamp duty acts as a barrier to house purchases by creating an exemption for first-time buyers. While this will no doubt be welcome, the fact still remains that many first-time buyers will eventually want to trade up to larger properties, family homes, and then down again to retirement properties, forever homes. They can only trade up if they can afford larger properties when the time comes and similarly people currently in family homes can only trade down if they can sell their family home for a price which makes it worth their while to move. Stamp duty is a clunky and inefficient tax, which desperately needs to be removed, even if only to be replaced by a more efficient form of taxation.
Reduce business rates
Give struggling businesses breathing space by reducing business rates across the board.
Make it easier for landlords to give up vacant business properties
The government has stated that it wishes to maximise the use of land, particularly brownfield land and to facilitate the conversion of excess commercial property into residential property. It is in nobody’s interests for commercial property to lie empty, particularly not for the landlord who has to pay business rates on a building which is not producing an income. The government could introduce a scheme whereby landlords could easily sell long-vacant commercial property to local councils for conversion into residential property.
Bring back some element of capital gains tax relief for international investors
While the Chancellor’s decision to abolish capital gains tax relief for international investors was understandable from the perspective of making it less attractive for people to speculate on UK property, it has impacted genuine investors as much as speculators and the chancellor should acknowledge the difference between the two and work to provide a means to incentivise the former while discouraging the latter. One option, for example, would be to grant capital gains tax relief only on properties which had been occupied for at least a certain percentage of the time during which they were owed. This percentage would have to be less than 100 to allow for the void periods which are commonplace with any form of investment property be it commercial or residential, but could be set high enough to discourage speculators who simply planned to buy and hold empty property to benefit from capital appreciation.
Create different tax structures for different parts of the UK
At the moment, this is challenging under EU rules, although both NI and Scotland do already have some degree of control over certain aspects of taxation. Outside of EU rules, however, the government could make greater use of tax incentives to direct investment where it is most needed.