Property prices and divorce in the shadow of Brexit

20 December 2018

No one, anywhere, has any idea which direction the property market is going to go in 2019 but if you ask Mark Carney, the Governor of the Bank of England, his worst case scenario is that a post Brexit UK, with no deal, could see prices fall by 35% over three years.

Estate agents, in times of crisis, have traditionally relied on the certainties of death and divorce to fuel the market, something that they may now have to reconsider.

For most people, property and pensions are the major assets - with property being the most liquid. I have not met anyone contemplating a divorce at this time who sees the sale of their home as anything but problematic and the idea of buying, if they were able to sell, as risky.

The possibilities are bleak, however doing nothing may not be an option - sell now only to find yourself a buyer in a positive outcome to Brexit world with prices being driven up, or - don’t sell now and lose the opportunity of buying as the market falls. 

Families who have invested in the buy to let market face even greater uncertainty as the net value of each property will also have to take account of capital gains tax payable on each sale or transfer, a calculation that depends on knowing the value of each property.

If the prospect of divorce and separation has become more complicated for the property owner contemplating divorce, a recent court case has made the possibility of existing court orders and agreements being reappraised, a distinct possibility.

The case of US v SR [2018] EWHC 3207 (Fam) 29 November 2018 tells the sad story of the high costs of litigation and how a High Court Judge in London acknowledging “the near collapse of the Russian property market over the intervening months and years” led to a delay in the sale of a property of Moscow and a significant drop in its value. The judge decided, two years after the original order to a significantly alter the original decision against a backdrop of one of the parties representing themselves (they were being sued by their former solicitors for unpaid fees) and the other dependant on the generosity of their historic legal representation.

There is a postscript to the decision with a reference to a property in England.

“The best offer which has been received to date is £1.18m…the lack of interest from purchase’s to date at the agreed valuation of £1.4m may very well be the result of the general uncertainty in the property market (the national Brexit effect)”

Uncertainty, risk and speculation are not good companions to the divorce process which suggests the likelihood of a further decline in the number of people seeking a divorce next year.  Some might say that this is positive for society whilst those literally locked into a toxic home environment with all the emotional damage that goes with it are likely to have a very different view.  Happy New Year! 

Further information

If you are interested in finding out more about how we can assist you, please contact a member of our family team at Kingsley Napley.

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