Britain became a member of the European Union in 1973, and ever since, Brits have been the biggest buyers of overseas homes and apartments across Europe, especially in France and Spain. Now that a Brexit looms large – what does it mean for you and your holiday home abroad? Should you sell overseas property quickly?
Nobody is quite sure if a Brexit will actually happen. There are opposing views on this in Britain, but the one that matters, that of Prime Minister David Cameron’s, it very much against a Brexit.
However, prominent politicians such as the London Mayor Boris Johnson are in favour of Brexit and have stepped up their anti-EU rhetoric. Opinion polls in Britain are divided on Brexit, and nobody quite knows what might happen in a national referendum as of now.
There are a lot of compelling reasons for Britons to buy holiday homes abroad as of now – lower taxes, better health care, easy travel, affordable mortgages and so on. Could this change if there was to be a Brexit?
Well, we don’t know as yet about the terms of the Brexit, so we can only make educated guesses here. Let’s consider some of the scenarios that may emerge if there is indeed, a Brexit.
How would a Brexit affect the pound?
Negatively – the pound has never been stronger against the euro, and a Brexit would cause considerable volatility in the currency markets, which would affect the pound negatively. So those of you who are looking to buy a holiday home abroad after a Brexit will end up having to pay more for the same as the pound would be a lot weaker, which would reduce your buying power.
Would it be hard to get to your holiday home?
No, it would be easy enough to get to your holiday home in France, Spain and Portugal and other EU nations as we expect there to be bilateral agreements between them and Britain, even if Britain was to leave the EU. Remember, Britons are prominent buyers of property in the United States and Turkey, which are not a part of the EU (but Turkey hopes to be in the future). So while there are unlikely to be any restrictions on travel to France or Spain, it may not be as easy for Britons to travel to Bulgaria, Romania and Poland that do not have the same level of relationship with Britain.
Would it be hard to get a mortgage for your overseas property?
Yes, it will be harder to get a mortgage as a non-EU citizen than as an EU-citizen when buying a holiday home abroad. Many Britons have bought homes in France because of the low mortgage rates and cheaper houses – but a Brexit may mean that they might have the same access to low interest mortgage. European banks may view them in the same manner as they view Russian or Chinese investors. But it will still be much easier for Britons to borrow money abroad than it is for say, someone from Nigeria or Pakistan.
Would a Brexit make healthcare more expensive abroad?
As of now, Britons can get access to the same health services as the same rates as the locals in any EU country. However, a Brexit might change that, and the cost of the health care for British expats would depend on the bilateral agreements between the British government and those countries.
What about the taxes?
Being an EU national is very helpful when it comes to taxes. Brits enjoy a very low rate of taxation in Spain, Portugal and other countries because they are EU citizens as of now. Things are not as simple for non-EU citizens, who have to pay a lot more in the form of capital gains tax on the sale of a property. In France, for example, a non-EU citizen has to pay a capital gains tax of 49 percent! Certainly, this is not something to look forward to.