COMMERCIAL property investors are writing clauses into contracts giving buyers the right to walk away from real estate deals if Britain votes to leave the European Union this month, as a way to unfreeze a sector stalled by uncertainty over Brexit.

    Transactions in commercial property fell by 40 percent in the first quarter, according to the Bank of England, with many buyers and sellers waiting to see the outcome of the June 23 referendum in case an exit vote hurts property prices.

    In one example from a commercial transaction, a clause sets a deadline after the vote when the buyer would be permitted to terminate the contract if the referendum results in a decision to leave.

    Sellers too are taking legal precautions, seeking language in contracts to ensure that Brexit will not be considered a “material adverse change” that would annul a deal.

    Paul Firth, head of real estate at law firm Irwin Mitchell LLP, said a significant percent of the firm’s “bigger investment deals” with values ranging from 10 million pounds (US$144 million) to 80 million pounds either included Brexit clauses, or purchasers had sought to negotiate that they be included.

    He said the use of such clauses had increased in recent weeks as the referendum date draws closer.

    “Investors fear that the value and return on investment properties may decline and that it may not be as good an investment if Britain withdraws from the EU,” he said.

    Since commercial real estate deals are usually confidential, it was not possible to determine precisely how common such clauses are.

    However, half of the 24 law firms, brokerages and commercial property firms polled said they had used Brexit clauses, brokered a deal with such a clause or had requests to include them in at least one deal. Some of the others said they had seen them.

    Prime Minister David Cameron and other politicians supporting the campaign to stay in the EU say a vote to leave would damage the economy and cause property prices to fall. Those campaigning to exit say any such threat is overblown and Britain can prosper outside the EU. (SD-Agencies)