An ‘out’ vote could mean that in 10 years’ time we’d find ourselves with a severe skills shortage of construction workers.
A British withdrawal from the EU risks drastically reducing the construction workforce, compromising current plans to build hundreds of thousands of new homes.
A report on the effects of a Brexit vote written by the National Association of Estate Agents, the Association of Residential Letting Agents and the Centre for Economics and Business Research said imposing greater restrictions on foreign workers coming into the UK may compromise the UK’s ability to build homes.
Construction-based jobs are decreasing in popularity among UK nationals and, as one in 20 current construction workers were born in non-UK EU countries, workers from non-UK EU countries are becoming more important than ever in filling the skills gap to boost housing stock.
Mark Hayward, managing director of the National Association of Estate Agents, said: “An ‘out’ vote could mean that in 10 years’ time we’d find ourselves with a severe skills shortage of construction workers.
“So even if we then had planning permission, investment and materials to build more housing, we simply wouldn’t have the resource to put the bricks and mortar together. It has the potential to have a very damaging effect on the future housing market.”
However the report also suggested an out vote could provide first-time-buyers with breathing space as demand for housing eases off.
Non-EU businesses are currently attracted to the UK’s status as a gateway to the single market as it allows them to establish and grow their presence across Europe.
In 2014, a fifth of total FDI inflow into the UK came from EU sources, and in 2013, 17% of sales in London’s prime property market made to non-UK recipients were to European nationals.
In the event of Brexit, a portion of FDI would be re-directed to EU countries, freeing up housing units, particularly in London, previously purchased through FDI for British buyers.
There are currently 3.03 million UK residents who were born in other EU countries.
If, following a Brexit vote, the UK does not maintain free movement of labour the total population of the UK could decrease by 1.06 million people.
With fewer people, demand will ease, making the market more accessible for first-time buyers, as well as second steppers and last-time-buyers, and this is will be especially apparent in the capital, said the report.
Reduced migration would also affect the private rental sector (PRS). Currently, private renting is a more popular choice among UK residents born in non-UK EU countries than for UK born individuals; if migration reduces the flow of renters from Europe, demand will weaken, which would put downward pressure on rent costs.
David Cox, managing director of the Association of Residential Letting Agents, said: “The fact that rent costs would face downward pressure is both a blessing and a curse.
“While renters should face fair and reasonable prices, landlords need to be able to at least break even on any out-goings they have, such as a mortgage.
“If demand eases to such an extent that landlords cannot recuperate costs, we’ll likely see a mass exit from the market, which would then just have the opposite effect on demand as supply falls – and we’d be back to square one.”
Cox added: “Those whose freedom to work and live in the UK is at risk of Brexit are a key demographic for the private rented sector.
“Current projections of demand for rental properties therefore could be offset by Brexit. If the sentiment towards London as a “safe haven” changes, the UK’s largest rental market will feel the brunt of a Brexit decision.”
