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News: After Brexit, how will British buyers in Spain be affected?

1 Jul 2016 Back
After Brexit, how will British buyers in Spain be affected?

Is it still possible for us to buy a property in Spain?

Most certainly - it is still possible for Brits to buy a property in Spain The result of the Referendum has not affected the rights of British and other EU citizens yet, and it will take more than two years before the resulting changes in trade and Social Service arrangements can be settled. In fact, it will be quite some years before British property buyers feel the actual impact of the changes.

How does a fall in Sterling change things?

Regrettably, it is a fact that the most immediate effect of the successful Brexit campaign is a weakened Pound Sterling. This means that in the short term, Spanish property has just become more expensive for British buyers.

Whilst the currency exchange rate is likely to be extremely volatile in the next few months it is possible for British buyers to take sensible steps to insure themselves against currency risk. We strongly recommend a company such as: Moneycorp (trusted foreign exchange since 1979), who have experts on hand to ensure you get the best deal for your sterling.

Looking at the wider picture, however, it is worth considering the current property situation in Spain today. Whilst it is a fact that Spanish House prices have certainly been recovering steadily over the last two years, they still remain 32% cheaper than they were at their peak prices in 2007.

This means that Spanish property remains at excellent value - with prices at extremely low levels.

How will my property in Spain be affected when the UK finally leaves the EU?

For decades now, Spain has enjoyed a long history of welcoming house buyers from overseas, and these now account for one in every five house sales. Buyers from non-EU countries are very active in the market today, and do enjoy similar rights to those from EU members.

Leaving the EU is extremely unlikely to cause a problem for British citizens who wish to buy a property in Spain. Overseas investment in Spain is far too important to their economy!!

Will it still be possible to get a Spanish Mortgage?

Spanish Mortgages will most certainly still be available. Currently, Spanish banks typically ask overseas buyers for a deposit of up to 30% of the purchase price. This could - of course - rise, but it is necessary to point out that this rate is already at a level which gives banks excellent protection, and it is not anticipated that this level will change much in the future.

Realistically, the economic climate throughout the whole of Europe is such that interest rates remain low. The cost of borrowing in Spain will continue to represent good value.

Is a Spanish property market crash foreseen?

It is most unlikely that there will be a 'crash' in the Spanish property market.

British property buyers in Spain continue to be important to the market. It is a fact that they are the largest single overseas nationality to invest in Spanish property (even though the British represent just 4% of the market).

Also valid in judging that 'Brexit' is unlikely to 'set off the line of dominoes' that will cause an overall crash in the market is the fact that foreign buyers of property in Spain are made up of a diverse group that includes: Belgians; French, German, Italian and Swedish citizens (amongst others), who all form a very active part of the growing market in Spanish properties. Even a complete collapse in UK demand (which will never happen anyway) would only be a minor dent in the Spanish housing market.

Furthermore, the Spanish property market has been recovering gradually and steadily since 2014 in all of its aspects. The very worst we might expect from the 'Brexit' decision would be a slight downturn in the market's positive growth pattern.

Can I still use my EHIC card in Spain?

You can definitely still use your European Health Insurance Card in Spain and other European countries. This card provides reciprocal health cover for travellers in the EEA. It will remain valid for at least two years while Brexit negotiations are taking place.

European countries are keen to ensure that their citizens enjoy healthcare while travelling, so it's entirely possible that an EHIC agreement (or something similar) will remain in place even after 'Brexit' is complete.

Will I still get full healthcare if I move to Spain?

For at least the next two years, you will still be able to get full healthcare in Spain. As long as Britain remains in the EU, reciprocal healthcare arrangements will continue as before. Expats who live in Spain and contribute to the social security system already receive full healthcare, and will continue to do so regardless of Brexit.

Nobody yet knows if this arrangement will remain, though many commentators predict British pensioners will require some form of health insurance post-Brexit.

Can I continue to receive my British pension?

British pension and social security payments will continue to be paid into Spanish banks - as before.

Today's single market rules currently allow for UK citizens living in Spain (and indeed the whole EEA) to have their pensions and social security payments automatically uprated each year in line with local inflation. This system is a mutual EU arrangement and is likely to become a negotiating point in Brexit talks.

In the worst case, British pensioners in Spain could get similar treatment to those in Canada and lose their automatic right to pension increases.

What is the situation with Inheritance Tax?

British and all EU citizens currently get very good tax treatment in Spain, including the fact that they only pay the same inheritance tax as locals.

The double-taxation treaties that enable these are NOT made in the EU. Therefore Brexit will have NO effect on the existing tax agreements between the UK and Spain.

So, what is going to happen now?

In fact - absolutely Nothing is going to happen generally now for the immediate foreseeable future. So Zero change for the time being.

We will only notice minor fluctuations in the exchange rate for the time being until the two-year process of leaving the EU happens - and that cannot start until Article 50 is officially triggered by the British Government and nobody else (expected in October of this year - 2016).

Furthermore, the EU referendum that has just taken place is non-binding , and there will be long back-and-forth processes of talks, disputes, debates and bartering over what pathway to follow, or indeed exactly who will be leading the British Government!

With the leading British 'Brexiteers' already cutting back on their campaign speeches and promises, it is not even yet a foregone conclusion that Britain will completely leave the EU. Doubts are questioning whether 'Brexit' actually means a full withdrawal from the single market (EEA).

For sure, the whole process is likely to be slowed down by all the red tape.

We can conclude that Britons will continue to enjoy the benefits of European Citizenship for some years yet and it is likely that they will enjoy a similar situation even when 'Brexit' is complete.


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