An anniversary no one is celebrating

Everyone with half a brain cell, that’s who. Divorcing after 40-odd years of marriage was never going to be easy. Anyone who thought otherwise when the margin of victory for the leave camp was so wafer thin was deluding themselves (lest we forget, on 23 June 2016, just over half of voters voted out, amounting to just over a third of the nation – hardly evidence that “the people have spoken”, as was claimed by some at the time).

Nobody is deluding themselves any more. We may have become desensitised to scare stories of flights being grounded come 30 March 2019 and barely batted an eyelid over the game of parliamentary ping-pong played over the past week, but we know all too well what impact Brexit has already had on the property industry – and what impact it could yet have.

A dark cloud of uncertainty continues to hang over the sector. Fears of a banking Brexodus that had ebbed are now starting to flow once more. The cheap pound continues to bolster foreign investment, sometimes at the expense of domestic. And consumer spending remains under pressure, weakening an already structurally compromised retail sector.

It is not all doom and gloom. As we report this week, most of the UK property funds hit by redemptions following the referendum have recovered. Many experts also attribute the relentless rise of the flexible workspace sector as much to Brexit as to changing working habits.

However, the threats seem increasingly to outweigh the opportunities. Just ask Clive Fenton, who specifically blames Brexit for McCarthy & Stone’s woes. It has been downhill all the way for the retirement living business since the EU referendum, with its shares now standing at less than half their value before the vote.

As Fenton notes, the lack of government support and proposed ban on ground rents haven’t helped. Neither has the fact that the business has not been able to benefit from Help to Buy, which has instead propped up demand for new homes and artificially boosted the fortunes of the mainstream housebuilders.

There is a certain irony, of course, in the fact that the very buyers who voted to leave have since become reticent about moving and jeopardised the fortunes of a business aimed squarely at them. But then again, it is hardly surprising they are loath to facilitate a move into retirement housing by selling their houses in a weak market. Who wouldn’t be?

So could rental be the answer? It is a question that raises another question: irrespective of Brexit, is McCarthy & Stone’s model fit for purpose in the current market? Although the business has started to offer rental properties with PfP Capital, it primarily operates in the ‘for sale’ market and that is starting to look like a precarious position to be in when you consider the models operated by new entrants to the market.

It cannot suddenly pivot – that would erode its margins. Yet move with the times it must. If it doesn’t, McCarthy & Stone risks becoming the Regus of the retirement living market, overtaken by new, more nimble companies – and with Brexit piling on the pressure, it is not the only one.