Challenges around freedom of movement, which will be a factor in a number of European elections set for this year, may result in restrictions or at least onerous visa requirements. However, Mr Robinson states that, “it would be very hard to see British residents refused entry visas to visit their foreign property (contributing, as they do, to the local economy), but some will certainly no longer feel ‘welcome’ in their host country.”
Will Brexit persuade more UK citizens to emigrate?
“Online searches from the UK to move to such countries as Australia, New Zealand and Canada have certainly spiked following the referendum,” says Mr Robinson. However, he believes the choices for emigration are often personal, “the reality of being out of the EU will certainly motivate some to move country – but perhaps only being a catalyst to those who had been considering such a move anyway.” Indeed, Halo Financial’s survey found that 62% of buyers said “no” or “not really” when asked if Brexit influenced their overseas property purchase.
What will be the impact of Brexit on visas, tax, passports, currency, and migration?
There are many potential political ramifications, especially due to the UK’s desire to control its borders for immigration purposes, which could lead to exit from the single market.
The Potential impact of Brexit for overseas property owners
|Implicationsfor overseas property owners
|Visas may be required to visit some European countries
|Could be expensive or administratively difficult as countries impose reciprocal limitations
|Existing tax harmonisation treaties will need to be re-thought
and re-negotiated – avoiding the jeopardy of being taxed twice
|Financially hard-pressed EU countries could hike taxes on foreign property owners to raise revenue
|New passports will have to be issued
|Reminder of UK’s solo status for emigrants
|Pound may rise against the Euro in late 2017
if economy improves
|Unlikely that currency controls restricting the amounts that individuals can transfer between countries will be put in place
|Freedom of movement a key issue in national elections throughout EU
|European host countries may increasingly view foreigners with suspicion
However, Mr Robinson believes that stemming the flow of cash from British expats would not be pragmatic. After all, “more than 1.2 million British expats live in (mainly) Spain, France and Ireland with an estimated one million plus British residents who also own property in the EU and visit regularly for holiday or retirement purposes. It would be folly for an EU (political) decision to dis-incentivise these 2.2 million British people spending their money in EU countries.”
What protection would you like to see in place for UK buyers overseas?
“What the AIPP would like to see is a genuine engagement with the UK government to ensure it fully understands the key issues and vulnerabilities British resident owners face through, what promises to be, some tough Brexit negotiations,” says Peter Robinson. The general view is that, above all, the AIPP does not want to see British citizens ‘punished’ by political expediency.
The AIPP sent a document to Minister for Brexit, the Rt. Hon David Davis, M.P. examining Brexit and international property and outlining 20 Key Points of Issue facing British owners of a foreign property in the European Union.
AIPP’s 20 key points for British owners of a property in the EU
1. The ability to visit European countries: i. Visa requirements, ii. Time limits iii. Restrictions iv. Travel arrangements (driving, flying, ferry, boats etc) v. Ability to take items in and out of the country (own assets, goods bought in a country etc)
2. The ability to travel freely within Europe once you are there: i. Visa requirements ii. Time limits iii. Restrictions iv. Travel arrangements (driving, flying, ferry, boats etc) v. Ability to take items in and out of the country (own assets, goods bought in a country etc)
3. Ability to bring goods back to the UK freely and take goods to Europe: i. For example, taking your furniture to your property in Spain, bringing back household items bought in France etc. - whether for personal use or for business
4. Ability to own property in EU countries: i. Restrictions on where you can buy? (e.g. country or even within a country - military sensitive areas for non-EU citizens, borders etc) ii. Restrictions on how many properties you can buy? iii. Ability to rent out / restrictions on rental iv. Permission needed to buy? v. Do you have to be resident or can you also be non-resident? vi. What does ownership entitle you to, if anything, over and above just a normal visit to the country?
5. Ability to Live in Europe: i. Work a) Requirement for work visas? b) Limit on length of time? c) Ability to set up a business d) Ability to be shareholder / director of a company ii. Retire after retirement age iii. Retire “early”
6. Harmonisation: i. Ability of non-EU spouses of EU citizens to enter & reside, travel without visa
7. Implication on double taxation treaties: i. Capital Gains Tax ii. Income Tax iii. Inheritance tax
8. Treatment of taxation generally: i. Impact on tax harmonisation; local taxes on foreigners reduced to same level as for nations (e.g. CGT in Spain) ii. Additional taxes on non-EU citizens
9. Inheritance: i. The harmonisation of Inheritance Laws within Europe in August 2015, which has made this area much easier and fairer
10. Consumer protection laws i. For example, Timeshare legislation, advertising standards, enforcement etc
11. Enforcement of judgements / debt collection between the UK and the EU
12. Lending laws / mortgages
13. Healthcare: i. For visitors to EU a) Free emergency healthcare (EHIC) b) Non-emergency treatment / necessity for travel insurance ii. For people working in EU a) What is included / free b) Necessity of insurance? c) Requirement to work there? iii. For people retired but under retirement age (which retirement age – UK or EU Country?) a) What is included / free b) Necessity of insurance? iv. For people retired but over retirement age (which retirement age – UK or EU Country?) a) What is included / free b) Necessity of insurance?
14. Cross border transactions (for example agents selling property): i. What laws in which countries apply? ii. What happens if the laws conflict? iii. Increased red tape due to, for example, requirement to register for antimoney laundering in two jurisdictions? iv. Consumer v. Taxation on sales vi. European Professional Card / Licenses to sell property in EU?
15. Retirement: i. Pensions; a) Ability to have pension paid directly to that country b) Increase in pensions in line with inflation or static at date of moving? ii. Voting rights
16. Ability to apply for citizenship of EU country
17. Cars (and other vehicles including boats and planes): i. Travelling within EU ii. Ability to export personal car to another country. How long do you have to re-register iii. Insurance issues when travelling in Europe iv. Enforcement of traffic legislation between countries
18. Pets: i. Ability to travel with pets / Pet Passport
19. Administration: i. Ability to have official documentation in a language of the EU / right to have documentation in English
20. Banking: i. Ability to have a bank account / open a bank account ii. How much money can you have in account iii. Restrictions on transfer of money iv. Protection of money in accounts v. Ability to open an account in one country for use in another when the bank has a branch in UK vi. Ease / harmonisation of AML - Anti Money Laundering Regulations
The AIPP focuses on two key aims: Trade – Business Development & Best Practice and Buyers - Education & Protection.
AIPP has 370+ corporate members (2,500+ people within) in 31 countries around the world, including estate agents, developers, lawyers, banks, currency, technical advisory and other cross-border professionals.
Exchange rates and Brexit
The team at Halo Financial is also closely following and analysing the implications of Brexit for its private and business clients.
Founding Partner, David Johnson explains, “The general view is that the exchange rate has influenced some decisions about property purchases or emigration to countries such as the USA, Australia or New Zealand. On the other hand, with the passage of time since the vote, there has been a greater demand for currency exchange services from UK businesses, who are seeking to manage their currency risk more proactively to offset the movements in the markets and protect the bottom line.”
Overseas property professionals recommend that buyers always carry out appropriate due diligence and take advice from real estate, legal and financial experts.
Halo Financial’s free report, Vision: Brexit
explores in more detail the implications and impact of Brexit for individuals and businesses.