Mediterranean weather, picturesque coasts, delicious food… given what Spain is famous for, it’s no wonder that the country is a magnet for nearly two and half million vacationing Brits every year. Many decide to put down roots there too. An estimated 300,000 UK nationals have settled in Spain, representing a quarter of the 1.2 million British people who live in other European states. That’s without taking into account all those who own holiday homes, who spend anywhere from a couple of weeks to several months a year under the Spanish sun.British property buyers are the biggest investors in Spanish real estate, accounting for nearly 25 per cent of property purchases by foreign nationals. But what will Brexit mean for all those Iberian expats?
Until Article 50 of the Lisbon Treaty is formally triggered, the UK remains part of the EU. Assuming that the European Union (Notification of Withdrawal) Act isn’t held up by the House of Lords, a two-year period of exit negotiations should begin on or around March 9th, meaning that Britons will still be considered EU citizens until 2019.
Over the next two years, therefore, Britons will still be able to buy property in Spain under existing regulations, taking advantage of freedom of movement guarantees for EU citizens.
The strength of Sterling in the pre-Brexit era played a major role in the British buying spree in Spain, and even though the result of the referendum has since caused significant currency volatility, with the British pound losing some of its value against the Euro, experts maintain that there is no sign of waning interest in Spanish properties, especially among retired Britons. Many Britons are even accelerating their plans to buy a house on Spanish soil while the UK remains a full member of the EU.
Making cross-border money transactions can often cause serious headaches for expats, especially in terms of sky-high bank fees, so if you’re planning to invest in overseas real estate, it’s worth considering other solutions, such as Covercy’s premium payment platform. It’s user-friendly, fast and secure and could save you up to 80% on your international payment processing fees.
It’s also worth looking ahead to consider the potential economic outcomes of British independence from the EU. In terms of the new treaties which will have to be worked out, there are three main possible scenarios.
The UK could remain part of the European Economic Area (EEA), retaining full access to the single market and keeping its citizens’ current rights of freedom of movement intact. In this case, Britons could continue to invest in Spanish real estate just as they do now.
The second scenario involves the UK leaving the EEA, but agreeing terms with individual EU countries. This means that the rights of UK citizens living abroad would vary according to the country they’re residing in. It’s possible that France and Germany, for example, which have the most to lose from Brexit because their contributions to the EU budget will increase the most, might offer less favourable terms than other nations.
The third possibility is that the UK not only leaves the EEA, but also fails to negotiate certain rights for its citizens with the various EU members. Britons would then be treated as non-EU citizens, requiring visas to enter those countries and complicating the process of buying property in mainland Europe.
The likelihood of each of these scenarios could have a strong impact on Sterling’s value over the next couple of years, affecting the pound’s purchasing power. After years of recession, the Spanish economy is now finally showing signs of improvement, driving up house prices. After falling steadily from 2008 to 2015, property values rose by 6.34% in 2016. Prices are expected to continue rising for the foreseeable future, and, all things considered, now might be a good time to act.