Posted on June 27, 2016 in Economy, Opinion, Politics
The UK’s decision to leave the
European Union raises some important questions. Here’s how it will affect
British buyers in Spain.
Can I still buy a property in
Yes. Britain is still a member
of the EU and British citizens enjoy the same rights today that they did last
It is likely to take at least
two years to leave the EU, and many more years to settle the resulting changes
in trade agreements. British buyers are unlikely to feel the impact for some
What does a fall in Sterling
A weakened Pound is the most
immediate effect of Britain’s referendum. In effect, Spanish property has just
become more expensive for UK buyers.
The exchange rate is expected
to be volatile over the coming months, but buyers can take steps to insulate
themselves from currency risk. We strongly recommend Smart Currency Exchange, who have experts on hand to ensure you get the best deal.
It is also worth setting this
in a wider context: While Spanish house prices have been
steadily recovering over the past 2 years, they
remain 32% cheaper than their peak in 2007.
Spanish property remains
What will happen to my property
when the UK leaves?
Spain has a long history of
welcoming buyers from overseas, who now account for 1 in 5 house sales. Non-EU
buyers are extremely active in the market and enjoy very similar rights to EU
Leaving the EU/EEA is highly
unlikely to impact the rights of British citizens to buy property in Spain.
Overseas investment is too important to the economy.
Will I still get a mortgage?
Yes. Spanish banks typically
ask foreign buyers for a deposit of up to 40%. While there is scope for this to
rise, it is already at a level that provides banks considerable protection and
is unlikely to see much adjustment.
Meanwhile, the economic
climate in Europe is wedded to low interest rates. Borrowing costs remain good
Will the Spanish property market
British buyers are important
to the Spanish market and they are the largest single nationality among
overseas investors. However to put this in context, Brits form 4% of the
There are two reasons Brexit
is highly unlikely to trigger a crash. Firstly, foreign buyers are a diverse
group: German, French, Belgian, Italian and Swedish (among many others) are all
an extremely active, growing part of the market.
There may be some localised
pain, but even a complete collapse in UK demand (again, totally unlikely) would
only put a small dent in the market.
Secondly, the market has
nowhere to go. Spanish property has been recovering steadily since 2014, but
remains a very long way off its peak. The worst we expect from Brexit is
Is my EHIC card still valid?
Yes. The European Health
Insurance Card provides reciprocal health cover for travellers in the EEA. It
will remain in place for at least two years while Brexit negotiations are in
European countries are keen to
ensure that their citizens enjoy healthcare while travelling, so it’s entirely
possible an EHIC agreement (or something similar) will remain in place even
Will I get full healthcare if I
move to Spain?
For now, yes. As long as
Britain remains in the European Union, reciprocal healthcare arrangements
continue as before.
However the current agreement
is tilted heavily against Spain; they export young, fit people with minimal
needs, while taking in older people with higher healthcare requirements. The
Spanish government will seek to redress this balance.
After two years, Spain will
most likely require British expats to take out health insurance.
What about my pension?
Under single market rules, UK
citizens living in Spain (and indeed the whole EEA) 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.
How will inheritance work?
British citizens (and indeed
all EEA residents) currently get very good tax treatment in Spain, paying the
same inheritance tax as locals.
Crucially, the double-taxation
treaties that enable these are NOT made in the EU. Therefore Brexit has no
effect on the existing tax agreements between the UK and Spain.
What happens next?
In short, nothing for quite some
Exchange rate fluctuations
will be the only visible effect of Brexit in the short term.
The two year process of
leaving the EU will not begin until Article 50 is triggered and this is
currently scheduled to happen in October 2016. (Despite protestations,
Europe cannot force a faster pace until Britain formally takes this step.)
It is also important to note that
this referendum is non-binding, and British politicians will now enter a
protracted period of horse trading over what to do next – or even who’s in
With Brexit leaders already
dialling back their rhetoric and promises, it is not a foregone conclusion that
Britain will completely leave. Huge debating points now remain over
whether Brexit means a total withdrawal from the single market (EEA).
Time will tell, and it all
serves to slow the process.
The net effect is Britons will
continue to enjoy the benefits of European citizenship for some years, and can
expect a broadly similar deal once Brexit is complete.
The British love affair with Spain