Should expat investors in EU properties stay positive

Published:  10 Jul at 6 PM
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Even although it’s not at all clear how Brexit will finally affect UK citizens living in Europe, many Britons still planning to buy holiday homes are focusing on the effect of the UK’s divorce on foreign property prices.

Those who purchased homes in European countries prior to the referendum have already made a profit on paper due to the collapse of sterling after the Brexit result was announced, and may yet make more if a hard Brexit becomes reality. For those hoping to buy in the near future, a holiday home in the sun may well cost even more due to a further fall in the value of the pound.

The difference can be startling as, for example, a villa priced at 200,000 euros at the beginning of 2016 would cost 24,000 euros more this year. For those looking to escape the Brexit chaos and relocate to the UK, it’s a different, profitable story, simply down to today’s exchange rate. However, currency fluctuations aren’t’ the only effects on property prices, with Brexit a real threat as regards getting a foreign mortgage or being hit with less favourable interest rates.

It’s down to how banks view their clients, especially when they are non-residents. In France, for instance, the minimum deposit is set at 20 per cent of the full price for EU citizens, but some French banks demand as much as 50 per cent from non-EU citizens before they will even look at other aspects of mortgaging a new home. Other homeowner perks involved in EU citizenship may be pulled, especially should the UK decide to leave the single market, which step would automatically take the UK out of the European Economic Area.

If Britain manages to keep its double tax treaties with EU countries, expats should not be taxed twice on earnings, but France’s high rate of capital gains tax, for example, could hit hard on selling up. Continuing uncertainty over British expats’ rights to remain, pensions, healthcare and other benefits may well weigh on property prices in Europe, as might a large number of properties coming onto the market in 2019 should rights to remain and healthcare issues not be agreed by both sides.

At present, data shows over half of Brits who were planning to buy a property in Europe are still intending to do so and are not deterred by today’s lack of certainty. Even so, should moving to a European country become fraught with bureaucratic nightmares, relocators desperate to sell might well be inclined to reduce their asking prices, especially for cash buyers.
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