The U.K.'s vote to leave the European Union (EU) will have less impact on the country's residential property market than the hike to second-house taxation introduced in April, a senior executive at a financial services firm specializing in real estate said on Tuesday.
Ahead of the Brexit vote in June, the U.K. government increased the tax levied on purchases of non-secondary residences by 3 percent, to raise £60 million ($79 million) for affordable housing construction and community spending.
"We strongly believe the more significant effect (than the Brexit vote for the U.K. residential market) is the change to stamp duty (tax levy on house purchases)," Nick Whitten, associate director at Jones Lang LaSalle, said at a debate hosted with the Royal Institute of British Architects in London on Tuesday.
The stamp duty change is seen as a potential deterrent for holiday-home buyers or buy-to-let investors. The tax levied increases with the size of property purchase, with the top rate set at 15 percent for homes worth over £1.5 million.
There was a surge of real estate activity in March, as home buyers rushed to close details before the hike. Borrowing by home-buyers already in possession of a residence leaped 60 percent year-on-year, according to the U.K.'s Council of Mortgage Lenders. These purchasers took out a total of 69,800 loans, amounting to £13.8 billion.
At the debate on Tuesday, Mark Cleverly, commercial director at engineering firm Arcadis, said the U.K. government had "overshot" in hiking stamp duty by 3 percent. He added that the construction industry urgently needed government investment to prevent a slump in the wake of the Brexit vote.
Shares of U.K. house builders and real-estate investment trusts dropped sharply following the vote and trading was suspended in seven U.K. property funds.
Although a "remain" voter, Whitten said there were some sectors of the residential market that could gain from the vote. These included private rental, as people delayed making home purchases amid uncertainty as to how and when the U.K. might go about quitting the EU.