For UK citizens looking to purchase property in Spain, the impact of Brexit must be thoroughly assessed, as it has made the process somewhat more complicated and can have broad implications.
Brexit influence on international property
The overseas property sector is in for a rough ride over the few years as the consequences of Brexit play out, according to the AIPP (Association of International Property Professionals). The association wants to be certain the rights of British owners of a foreign property – considered to be more than one million – are included in considerations during Brexit negotiations.
Will Brexit prevent buyers from purchasing a second property in Spain?
In the short term, Brexit-triggered currency changes have negatively affected British buyers’ capability to afford a Spanish property in popular areas. This appears to be impacting buyers of second holiday homes more than buyers looking for retirement homes. Surveys have found currency volatility has had an adverse impact on sales.
Prior to the global financial crisis of 2008, the pound-to-euro exchange rate was healthy. The UK pound was at times worth as much as 1.52€ compared to the 1.15€ that it trades for now in May 2020. The GBP/EUR exchange rate has endured many fluctuations since the Brexit referendum, and now the COVID-19 pandemic is making matters worse. Low currency exchange rates could be off-putting for anyone thinking about buying a property in Spain after Brexit.
However, non-EU citizens like Scandinavians and Americans have bought property in Europe for years without issues despite having lower exchange rates.
How did Brexit affect the overall cost of international real estate?
Challenges over freedom of movement may result in restrictions or visa requirements. However, it would be very odd to see British citizens refused entry visas to visit their property as they contribute to the local economy.
Will Brexit influence more UK nationals to emigrate?
Online searches from the UK to migrate to countries like Australia, New Zealand and Canada have increased following the referendum. However, the reasons for emigration are often personal. But being out of the EU will likely prompt some to move to a different country – but maybe only being an incentive to people who had been thinking about moving anyway.
How will Brexit affect visas, tax, passports, currency, and migration?
There are many possible political consequences, mainly due to the UK’s wish to opt for an immigration points system, similar to that of Australia. From January 2021, there will not be free movement between the UK and EU, and although it is unclear what Britain’s immigration system will be, it could lead to an exit from the single market.
Part of the arrangement between the UK and the EU was a scheme which gives British citizens the freedom to live, work, open a business, or study within any European country they have moved to. However, it does not include freedom of movement within the Union. Access to health care, social security benefits, and working rights could also change for Brits wanting to buy a house or work abroad.
The potential Brexit impact on international property owners
We do not know exactly as yet what the impact will be on international property owners but limiting the cash flow from British expats would not be practical. After all, more than 1.2 million UK expats live in Spain, France, and Ireland, with another million plus British residents owning property in the EU and regularly visiting for holidays. It would be foolish to dis-incentivise these 2.2 million people from spending their money in EU countries.
Exchange rates and Brexit
As mentioned previously, the general view is that the exchange rate has affected some conclusions about buying property abroad or emigration decisions. On the other hand, over time since the referendum, there has been a higher than usual demand for currency exchange services from British businesses, who want to control their currency risk more proactively to balance the shifts in the markets and protect their bottom line.
Spanish property professionals urge that buyers always carry out due diligence and take guidance from real estate, lawyers, and financial experts before buying a property in Spain.