BREXIT – What it means for Brits in Spain

The UK’s decision to leave the European Union has not only raised eyebrows, it’s also raised several important questions for British property owners, buyers and sellers in Spain. So what happens next?

Here’s how Brexit is expected to affect the British in Spain.

Here and now

As the news of Brexit sinks in, there’s no need to panic. What happens next is in fact nothing…for quite some time:

:: Britain is still a member of the EU and gets the same rights today as it did before the referendum took place.

:: Spanish Interim Prime Minister, Mariano Rajoy, reassures us that there will now be “at least two years from the formal notification” of the UK’s withdrawal from the European Union, and: “during that time the security of the legal relationships between the UK and the EU do not change”. Indeed, it will take at least two years from the date Article 50 is put into motion, and that isn’t expected to happen until October 2016.

:: It isn’t even a foregone conclusion that the UK will completely leave the EU. The referendum is non-binding; therefore, British politicians will now enter a lengthy period of debate on who’s in charge, who said what and what to do next.

:: Whether we will totally withdraw from the EEA (single market) still remains to be decided; a question which is expected to be a huge debating point.

:: British people continue to enjoy the benefits of European citizenship, and as Spain has always welcomed overseas and non-EU property buyers (they now account for 1 in 5 of house sales), we can expect a broadly similar deal once Brexit has kicked in.

Exchange rates. For now, exchange rate fluctuation is anotable effect of Brexit and the weakened pound is expected to stabilise over the coming months, once the immediate period of uncertainty has passed.

For Spanish property purchasers, it’s all the more vital to get the best deal by using a good currency exchange service. When changing large sums of currency, it pays to get the most advantageous exchange rate possible and many currency bureaux offer locked rates so that the transaction takes place at a particular rate, even if it drops again.

If you are interested in finding out more on how to save money when converting currency please Click Here



Is Spain still a good option for the Uk buyers?

No-one really knows what will happen in the future – a crystal ball would be a fine thing; however, we can look at speculation and general indicators to get a worthwhile prediction on the prospects for British buyers.

These are a few things worth considering:
British buyers are important to Spain and they represent the largest single nationality among overseas investors making up four per cent of the Spanish property market. It’s unlikely that the Spanish will want to scare away British buyers from the market. Meanwhile foreign buyers as a whole form an extremely active, growing part of the market – more positive signs for market buoyancy.

The Spanish property market has been recovering slowly yet steadily since 2014, but it is still a long way off its peak in 2007. The worst investors can expect from Brexit is a slower growth rate. It’s a good time for long-term investors willing to wait for their returns from excellent value Spanish property, now selling at around 32 per cent under peak year prices.

What about the right to buy in Spain as a non-EU citizen? Many people believe that leaving the EU is highly unlikely to have an impact on the rights of British buyers of property in Spain, simply because overseas investment is way too important to the Spanish economy.

Mortgages are still available for British buyers in Spain, bearing in mind that Spanish banks generally lend between 60 and 80 per cent of the buying price. Europe’s economic climate benefits from low interest rates – Sabadell’s 20 year fixed mortgage rate is 2.5 per cent (July 2016) – so borrowing is great value.

Are investors still buying in the short term?

The level of enquiries generated from British buyers declined immediately following the Brexit decision, however within 72 hours enquiries stabilised and established a constant pattern in line with the second quarter of 2016. Generally speaking the British buyer looking for a long term investment does not appear to have been dettered by Brexit and is possibly keen to convert sterling to euros following the uncertainly surrounding the future of the British pound. For further information on Marbella’s hottest property selection   Please see our property recommendations

The practicalities

Healthcare is a common concern when living in a non-EU country. Obviously for now, the European Health Insurance Card (EHIC) continues to provide reciprocal health cover for UK citizens in Spain and it will remain in place for at least two years during the Brexit negotiations.

Expats who live in Spain and contribute to the social security system currently receive full healthcare, and will continue to do so regardless of their nationality. Meanwhile, many commentators predict that at worst, British pensioners, just like other non-EU pensioners, will most likely require some form of health insurance post-Brexit.

Pensions are another negotiating point during Brexit talks so the full extent of pension provisions has yet to be ascertained. British pensioners in Spain might get similar treatment to those in Canada and lose their right to receive pension increases.

Tax for British and other EEA citizens is currently favourable. We all pay the same inheritance tax rate as locals and, as importantly, the double-taxation treaties that enable this and other benefits are NOT made in the EU. Therefore, Brexit will have no effect on the existing tax agreements between Spain and the UK.