Transactions in commercial property fell by 40% 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 seen by Reuters, 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, said a significant percent of the firm’s “bigger investment deals” with values ranging from 10 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 Reuters spoke to 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.

But whether overblown or not, it is a risk some buyers seem unwilling to take.

Guarantees are being offered not only for commercial property but also for homes. An invitation to a May 25 launch of some floors of Two Fifty One, a 41-storey luxury apartment tower going up in south London’s gentrifying Elephant and Castle district, offered buyers a “money back Brexit guarantee pledge”.

Buyers attending the launch would not have to exchange contracts until July 6 and could withdraw their offer and get their deposits back if they were unhappy with the outcome of the vote, said Martin Lent, chief executive of SCM, the development manager for the project by residential developer Oakmayne.

In commercial property, Brexit clauses are more common in higher value deals where the risks are greater, said Andrew Friend, director of a U.K. property fund at Henderson, one of Europe’s largest investment managers.

“Deals that include these clauses tend to be at the higher lot size end of the market and they’re more focused on sectors such as financial office space in London, which are more sensitive to a Brexit type situation,” said Friend.

FOREIGN INVESTORS

Brexit clauses are particularly in demand among overseas investors. Two lawyers dealing with property said most enquiries about Brexit clauses were from foreign investors who were concerned that an “Out” vote could weaken sterling, as well as reduce appetite for leasing commercial space in Britain.

“When it comes to international investors looking to build global or European portfolios, we are either ‘on hold’ or would use a Brexit clause,” said Rob Wilkinson, chief executive of AEW Europe, which managed property assets in the UK worth about 2.1 billion euros as of March 31.

Melanie Curtis, a real estate partner at law firm K&L Gates, said she had worked on a deal with a Brexit clause in a commercial property transaction worth more than 10 million pounds, in which her firm acted on behalf of an overseas buyer.

“The buyer required a Brexit clause, as it may reassess its UK investment policy in the event of withdrawal from the EU.”

James Crookes, head of real estate and property at law firm Pinsent Masons, said some clauses, rather than giving the buyer the right to walk away or renegotiate, would automatically reduce the purchase price of a property in the event of a Brexit vote. In one deal, the price would be lowered by 1 million pounds.

“So they’re factoring in a valuation on the assets based on Brexit.”

Nick Lloyd, national head of capital markets at commercial property broker Lambert Smith Hampton, said offering Brexit clauses could also be beneficial for sellers, to secure deals while fewer transactions are taking place, in anticipation of a potential flood of properties returning to the market if Britain votes to remain in the EU.

“Whilst they mitigate downside risk for buyers, they can be attractive to a vendor who wants to avoid the risks of marketing during a potential oversupply of new stock after the referendum,” said Lloyd.

But with less than a month to the vote, two law firms and one property broker said they were now advising clients to reject demands for a Brexit clause and simply put deals on ice.

“One seller recently asked the buyer to confirm it would proceed with the purchase irrespective of the outcome of the referendum,” said Mark Payne, a partner in the real estate team at law firm Clifford Chance.

“This proposal was, however, rejected.”