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Post-Brexit Reality Check Q&A for British property buyers in Spain

British-property-buyers-in-spain

British-property-buyers-in-spain

Since the referendum on 23rd June and the subsequent result that the UK voted to leave the EU, the dust from the earthquake is beginning to settle (a little), if only by the fact that nothing has actually changed, yet.

There has been a clamor from industry chiefs and politicians as to what will happen next but the consensus is that nobody actually knows until the British government implements article 50 triggering the UK’s formal application to leave the European Union, expected in October 2016. Neither the ‘Remain’ camp expected to lose nor the ‘Leave’ camp to win. So no real plans were actually made in advance. This is only just beginning to happen now.

However, what are the consequences for the British still wishing to move and rent or buy in Spain?

Q: What are my rights as a British citizen wishing to purchase a property in Spain?

A: The same as last week before the referendum. It is expected to take at least two years to re-negotiate Britain’s relationship with Europe once article 50 has been enacted. Remember also those citizens from Switzerland and Norway also buy property in Spain and neither of them are EU members. Going back some forty-three years ago when the UK joined what was then known as the Common Market, a Brit could still have bought a property in Spain. I know, as my father bought in Marbella in the sixties.

Q: What effect will Brexit have on the Spanish government’s views towards the British investor or holidaymaker?

A: The British are at the top of both the league for the highest number of tourists visiting Spain in 2015 from a single nation (20% of over 60M visitors) as well as topping the list for the nationality that most purchased a property in Spain (21% of all foreign purchasers in 2015).

There are also thousands of retired Brits who live and rent in Spain who receive their monthly pensions from the UK. Furthermore, there are over 200,000 Spaniards living and working in the UK. It is doubtful that the Spanish government would wish to upset the apple cart.

Q: How will weak Sterling affect me?

A: Since the referendum, the Pound has taken a beating over the weekend and during early trading on the Monday and Tuesday. It has dropped significantly against the Dollar. Less so against the Euro, but still dropping from a pre-Brexit high of 1.31 to a current 1.21. In the meantime, the FTSE however has recovered nearly all of its losses in less than a week.

One way to get a feel for future exchange rates is to consult foreign exchange companies in London. Firstly they will tell you how they expect rates to be in 1, 2, 3 or 6 months, and if these rates should suit you, and your timing to buy in Spain, you can advance purchase Euros from them whilst being guaranteed these rates despite future market conditions.

Q: Can I still get a mortgage in Spain?

A: Since Spain’s own recession since 2008, Spanish banks are now providing mortgages in Spain to both Spanish nationals and overseas buyers. You can expect banks to ask for a deposit of up to 40%, i.e., they will lend around 60% of their valuation of the property that you wish to purchase.

Q: Will Brexit affect Spain’s property market recovery?

A: Despite the high numbers of British citizens who have bought in Spain, fortunately Spain’s property market also attracts buyers from all over Europe and beyond. In particular, the Germans, French, Belgians, Italians and Swedish are also strong buyers. Property sales to foreign buyers have continued to rise considerably over the last two years.

Q: If I move to Spain as a pensioner, will I still be able to claim health benefits under EU law?

A: The European Health Insurance, known as EHIC, provides reciprocal health care for EU citizens and travelers to other EU countries. Whilst nothing will change over the next two years, it is highly probable that ongoing negotiations between the UK and the European parliament will reach common agreement on this issue especially given the fact there are an estimated 3 million EU citizens in the UK (the majority Polish, Irish and German) who will also wish to retain their rights of mutual health care.

Q: How will inheritance continue to work in Spain?

A: Inheritance is covered under EEA regulations (European Economic Area) and as such, is not subject to general EU regulations. British citizens in Spain receive a very favourable treatment as they pay the same rates of inheritance tax as locals. However, having said that, these rates of taxes vary from one autonomous region to another so please consult with tax experts in your area of Spain.

Q: And if I want to sell my property in Spain?

A: If for any reason you are considering the sale of your property, current lower exchange rates to buy sterling with Euros are in your favour. However, you can also sell your resale property in Spain in any currency of your choosing if in agreement with the purchaser. If you a Brit selling to a Brit, you can sell your property in sterling thus evading any exchange rates.

Q: So what happens in the near future?

A: Not a lot really. Article 50 must first be enacted by Britain. Already, there is much talk between MPs and MEPs if this article will indeed be activated. After all, the referendum was non-binding and is subject to a parliamentary vote. A general election appears to be on the cards and some parties are stating that they would campaign on the bases of a new renegotiation of the UK’s presence within Europe. If Britain does not proceed with activating article 50, it has not technically left the European Union.

EDITORIAL VIEW: As a British citizen who has lived in Spain prior to even Spain’s entry into the EU, and having experienced the difficulties at the time of living and working in Spain, forty years has changed dramatically the way Europeans feel about one another. Yes, you say, that is why Britain voted to leave Europe. However, the backlash to that result has already started as many ‘Leave’ voters have regretted their decision and would vote otherwise given another referendum. Two years is a long time to renegotiate Britain’s relationship with Europe. Just looking at the reaction in the first week since the vote, I would like to think that common sense DOES prevail and a suitable and mutual agreement is found.

Robert Edwards – LPG SPAIN Blog.

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4 comments on “Post-Brexit Reality Check Q&A for British property buyers in Spain

  1. Bernard

    A couple of points I think you need to be clearer on:
    Inheritance Tax is regulated by the EU in terms of electing which states laws you want applied in the event of your demise
    The EHIC provides reciprocal healthcare arrangements for visitors, not residents, from other EEA countries. Pensioners receive healthcare through a different reciprocal arrangement. The two are totally separate

  2. Andy mac

    I think you will see a slow down till after Britain comes out of the EU, it’s only human nature. We had hoped to purchase in Spain next year, but will put off now till things become clear.

  3. La incertidumbre siempre es negativa. La gente tiende a no actuar por miedo a equivocarse, como si no actuar no fuera a menudo un error. A corto plazo afectará negativamente hasta que las cosas se vayan aclarando.

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