Spain was the top European property destination for British buyers in 2015 – but Brexit could throw a spanner in the works.
Over the last two years, Spain has maintained its historic reputation as the top Mediterranean destination for Brits buying abroad but that could be about to change if Britain votes to leave the European Union.
Property purchases in Spain rose by around 90 percent in 2015 according to foreign exchange provider UKForex. Overall, it was the most popular country for Brits buying in Europe in 2015, thanks to a strong pound, still low property prices and great mortgage deals for foreign buyers.
But Alex Edwards, UKForex Head of Dealing, warns that the threat of Brexit paints the possibility of a drastically different future. Here are his five reasons why Brexit could affect decisions to buy or sell Spanish property.
– A lower exchange rate
If Brexit looks more and more likely in the run up to June, then the pound could continue to drop against the euro. This could make Spain, as well as other European destinations, a far less attractive proposition- the exchange rate is a key consideration for many buying Spanish properties. A falling pound could negatively affect British consumers buying overseas properties and more generally those funding a life abroad with GBP, whether that be a holiday or longer-term retirement.
– Securing a mortgage
If Brexit happens, EU banks might make it more difficult for Brits to get mortgages. This could be through limiting the amount they are willing to lend or by increasing the deposit amount required. It would be smart to investigate your mortgage options thoroughly, or, if selling, ask your prospective buyers to double-check theirs.
– Accessing healthcare
Most Brits rely on their European Health Insurance Card when holidaying or moving to Europe. This system might change should the UK leave the EU. If healthcare becomes suddenly more expensive or harder to access, it could be a deal breaker for overseas buyers looking in Spain, particularly retirees.
– Changes to investment protection and taxes
A lot of changes regarding tax and investment rules are on the cards should Brexit happen. It is difficult at this stage to know whether this might be good or bad for UK consumers, but non-EU residents might have to pay more in capital-gains tax, which could potentially reduce British interest in Spanish property.
– Rises in university fees
At the moment, British students studying in the EU pay the same tuition fees as locals. This could well change if Brexit goes through and might impact British demand for Spanish properties close to university towns, making it harder to sell your property.
Ultimately, no one knows whether Brexit will happen, or exactly how key EU agreements will be renegotiated with Britain if it does, but Edwards advises that protecting your property transaction against currency risk is the smart route to take in an uncertain market.
Source: The Local