Buying and Selling Overseas Property Post-Brexit
The UK’s decision to leave the EU triggered a variety of regulatory changes from travel to trading. The immediate fall in the value of the British pound (GBP) post-Brexit was to be expected, given that uncertainty is never a welcome development in financial markets.
Although the UK is now past the Brexit transition period, the great amount of uncertainty regarding the new rules, have caused further apprehension across currency markets. With so many unanswered questions concerning the future of UK/EU travel, international trading and overseas property markets, it seems there is plenty of room for further volatility.
Despite the ambiguity of owning a property in Europe post-Brexit, the confusion does not appear to have dampened the UK’s appetite for overseas property in 2021.
Brexit and Overseas Property
The main concerns amongst UK buyers when purchasing an EU property post-Brexit relate to uncertainty surrounding:
- Future property values
- Property taxes
- Mortgage requirements
- Property rights
- Visa requirements for exceeding the 90 days stay limit
The new regulation which prevents holiday homeowners from visiting their property for more than 3-months within a 6-month period has been the most aggravating rule for many. Anyone who exceeds the 90-day limit will be subject to a fine and is required to either:
- Apply for a long stay visa
- Apply for full long-term immigration
- Apply for a work permit
However, despite the above concerns, Taylor Wimpey Espana revealed UK searches for Spanish property was up 39% during the first week of 2021 compared to last year. Potential UK buyers have been using virtual viewings to take a look at their dream Spanish homes. So far, the most popular Spanish areas for would-be property buyers include Alicante, Mallorca and Costa Blanca.
It’s not just Spain where demand from UK buyers is growing, Taylor Wimpey Espana also found that interest in countries such as Germany was up 51% and Belgium was up 44%.
In addition to Brexit, travel restrictions imposed by COVID-19 are also currently preventing UK buyers from purchasing properties abroad. However, it appears that the pressures of Brexit and the pandemic have made Britons more determined than ever to secure their place in the sun.
In terms of holiday homeowners who are looking to sell their property post-Brexit, property prices in Europe, particularly in Spain, saw a significant increase towards the end of 2020. Palma de Mallorca, for example, saw property price increases of 1.4% in 2020. Whilst it is difficult to determine how European property prices will fare over the coming months, the upward trend is certainly promising for potential sellers.
In addition to new Post-Brexit travel regulations, the future of the euro (EUR) is also uncertain, given that the UK is the 2nd largest economy and 2nd largest contributor to the EU. The UK’s exit will undoubtedly have a profound effect on the EU economy and it is likely to weaken the euro (EUR) over time. As it stands, the British pound (GBP) has held steady against the euro (EUR) post-Brexit, with the British pound to euro (GBP/EUR) exchange rate currently trading at EUR 1.14, though the pressures of the third UK national lockdown could cast a shadow over the progress.
In essence, the future seems set to be just as volatile as the recent past and it’s important to ensure that everyone with a currency need is prepared and protected against the worst vagaries of the forex market. The process we would suggest for overseas property buyers and sellers are as follows:
- Open an account with a foreign exchange specialist such as Halo Financial at your earliest convenience so you can receive timely advice and plan accordingly for expected volatility.
- Consider a ‘limit order’ (ask your currency consultant for more details). While British pound (GBP) sellers may feel they have missed the boat, ‘stop-loss orders’ will let you set a ‘worst-case scenario’ rate if you have time to wait. This could help see your rates improve again, which coupled with a ‘limit order’ will give you the best chance of benefiting from any surprise fluctuations in the market over the next few months.
- Ask your currency consultant to set up a weekly call back so that you can get an update on the market and what is forecast.
If you’d like to know more about getting the best deal when buying a property abroad post-Brexit, please give us a call on 020 7350 5474.