Expat homeowners could suffer if Britain leave the EU
For British property buyers, Spain was the number one destination in 2015 but with the possible Brexit on the horizon this could all change.
In recent years, Spain has remained the top Mediterranean destination for those British buyers looking to purchase abroad.
During 2015, the number of property sales in Spain increased by 90%. This made it the most popular country for British Buyers and this was mainly down to the strong pound, low prices and excellent mortgage deals.
However, the possible Brexit could drastically change things so the following list of reasons show how Brexit could play a part in decisions to purchase or sell property in Spain.
Exchange rate drops even lower
As June edges closer, the Brexit is looking likely and this could mean that the pound could continue to fall against the euro. This would certainly affect the way in which Spain appeals to people because the exchange rate is one of the most crucial factors when it comes to purchasing property in Spain. Therefore, the decline of the pound could result in a negative view on buying property overseas as well as the impact it would have on those who use the pound to fund their life in Spain, regardless of whether it is a holiday or retirement.
Obtaining a mortgage
If Britain leaves the EU then British buyers could find it difficult to get mortgages. This can be done through decreasing the amount available to them or by increasing the required deposit. Therefore, buyers should do their homework when it comes to the mortgage options and for those who are selling they should ask their buyers to also check their options.
Many Brits rely on the European Health Insurance Card when they choose to move abroad or holiday there. However, this could change should Britain leave the EU. This could lead to healthcare costing money as well as making it harder to access; this on its own could put people off purchasing property abroad.
Investment protection and tax changes
There will be a number of changes to investment rules and tax should the UK leave the EU. There is no way of knowing at the moment whether these changes will work for or against the UK consumer. However, those non-EU residents may find that they have to pay more in capital-gains tax and this could lead to the British showing less interest in property in Spain.
Increased university fees
Currently, British students that study in the EU pay the same tuition fees as those from that country. If the Brexit happens then this could change and this could ultimately affect the demand for Spanish property that is located close to those towns with universities which in turn would make it more difficult to sell them.
Of course, the impact that Brexit may have is unknown and re-negotiations may have to take place with the EU but the best move to make at the moment is to protect your property transaction from the risks associated with currency because there is an element of uncertainty surrounding the market.
For more information, please contact overseas property specialists The Overseas Investor.