HOW BREXIT EFFECTS BRITISH BUYERS IN SPAIN
With the UK’s decision to pull out of Europe, we answer some important questions you might have regarding your purchasing a property here in Spain.
CAN I STILL BUY A PROPERTY IN SPAIN?
Yes, you can. Britain is still a member of the EU and we still have the same rights as before the exit.
It will probably take about two years to finalise the leave and many more years to settle the paper work and trade agreements. British buyers are unlikely to feel the impact for many years.
WHAT DOES THE FALL IN STERLING MEAN TO ME?
This is the most immediate consequence of Brexit you will feel in the early days. In effect, a Spanish property has become more expensive for UK buyers.
The exchange rate is likely to be highly volatile over the first few months but you can take some steps to reduce the currency risk. It is also worth seeing this in the wider context: Spanish house prices remain 32% cheaper than at their peak in 2007, which points to an excellent deal for investment.
WHAT WILL HAPPEN TO MY PROPERTY WHEN THE UK LEAVES?
Non-EU buyers are extremely active in the market right now and enjoy similar rights to EU nationals and Spain has a very long history of welcoming buyers from all over the world, so this is something Spain would seem unlikely to change.
Overseas investment is too important to the Spanish economy, so leaving the EU/EEA is highly unlikely to impact on the rights of British citizens.
WILL I STILL BE ABLE TO GET A MORTGAGE?
Yes. The banks here in Spain still ask buyers for a deposit of up to 40%. While there is still capacity for this to rise, its already at a level that provides banks with considerable protection and so there is unlikely to be much adjustment. While the economic atmosphere in Europe is united to low interest rates, borrowing costs remain good value.
WILL THE PROPERTY MARKET CRASH IN SPAIN?
British owners make up 4% of the buyers here in Spain, and they are the largest single nationality among overseas investors.
There are two reasons why Brexit is unlikely to prompt a crash. Firstly, the market has nowhere to go. Property has been rising here in Spain since 2014 but still has a way to go and the worst we could expect from Brexit is restricted growth.
Secondly, buyers in Spain are a diverse group with German, French, Belgian, Italian and Swedish being among the majority and even if there is some pain felt locally, even if there is a collapse in UK buyers, (again, totally unlikely) this would only put a small dent in the market.
IS MY EHIC CARD STILL VALID?
Yes. European countries are keen to ensure that their citizens have healthcare while travelling abroad, so it seems that the EHIC agreement will remain in place, or replaced with something similar.
WILL I GET FULL HEALTHCARE IF I MOVE TO SPAIN?
Yes, for now. While we remain in Europe, reciprocal arrangements continue as before.
Although the EU agreement is currently weighted heavily against Spain. British pensioners like to retire to Spain, and take with them all the problems old age can bring, whist back in Spain, they export fit, young people with minimal healthcare problems and Spain will be looking to redress this unfair balance.
After two years, Spain will most likely require expats to takeout healthcare insurance.
WHAT ABOUT MY PENSION?
All UK citizens living in Spain, under single market rules have their social security payments and pensions uprated automatically each year in line with local inflation. This system is likely to become a strong negotiating point during Brexit talks.
The worst case scenario is that British pensioners in Spain could get similar treatment to those in Canada and lose their automatic right to pension increases.
HOW WILL INHERITANCE WORK?
British citizens currently get very good tax treatment in Spain as do all EEA residents, paying the same inheritance tax as locals.
Crucially, the double-taxation treaties that enable these are NOT made in the EU. Therefore, Brexit has no effect on the existing tax agreements between the UK and Spain.
WHAT HAPPENS NEXT?
Quite simply, nothing yet and for quite some time to come. Exchange rate fluctuations will be the only visible effect Brexit in the short term.
Britain has to invoke Article 50 to leave the EU and this is currently scheduled to happen in October 2016. Europe cannot force a faster pace until Britain takes this step.
It is also very important to note that this referendum in non-binding, and that British politicians will now enter a protracted period of hammering out a deal on what to do next – or even who will be in charge.
With some Brexit leaders already back-peddling on their promises, it is not a foregone conclusion that Britain will completely leave. Huge debates will go on for months on whether Brexit means a total withdrawal from the single market.
Only time will tell and this all serves to slow the process down.
Over the next few years, Britons will enjoy the benefits of European citizenship, and can expect a broadly similar deal once Brexit is complete.
The British love affair with Spain looks set to continue for some time to come whether the UK is in or out of the EU.[slideshow_deploy id=’5378′]