Brexit focus remains on UK property

The debate about the damage Britain’s decision to leave the EU will inflict on its own economy continued over the weekend, amid reports the Bank of England was readying measures to stop a slide in investors pulling out money from property funds exposed to the London property market.

Britain’s three main banks have been in the firing line because they are exposed to any sharp falls in property values and to the slump in the value of sterling against the dollar and the euro.

Shares in RBS — the owner of Ulster Bank — rose on Friday but have fallen by almost a third since the June 23 Brexit referendum.

They are now 44% down since the start of the year. Lloyds’ shares have tumbled 28%, while shares in Barclays have slid 26% since the vote.

Last week, fund managers suspended trading in several UK property funds amid warnings London’s office values could fall as much as 20% within three years following the UK’s exit from the EU. UK property funds hold about £24.5bn (€28.7bn) in investments.

The Sunday Telegraph said the Bank of England is considering curbs on withdrawals from property investment funds.

A spokeswoman for the central bank declined to comment on the report, and the newspaper did not give a source for its information.

More than six British property funds suspended withdrawals last week to tackle a tide of redemptions after the June 23 vote. Investors are worried that the uncertainty will hit demand to rent and buy commercial property.

On Friday the UK’s Financial Conduct Authority — the FCA — issued guidance to property funds to avoid disadvantaging investors who had not sought to redeem funds.

The Sunday Telegraph said regulators were considering requiring funds to ask investors to give a notice period of 30 days to six months for redemptions, or to hold more liquid assets to meet withdrawals, such as cash or shares and bonds in property-related companies.