Should be business as usual for Brits buying property in the EU

British people seeking to buy a property in the European Union should not be downhearted by the referendum decision that the UK should leave, according to overseas real estate experts.

Those who are looking to purchase a holiday home overseas, for example, are likely to see that owning a property in the EU will only be marginally more complex than it is currently, according to Andy Bridge, managing director of A Place in the Sun.

He pointed out that citizens of the United States, Canada, Russia and many other nationalities own properties throughout Europe, so while it may become slightly more complex for British buyers than currently, they are not going to be prevented from owning property in Europe.

Erna Low Property, French Alpine property specialists located in London and in the French ski resort of Les Arcs 1950, say that buyers must resist the urge to panic as there will be no change to buyers conditions and they state that right now buyers should focus on risk assessment and limitation of potential future damage.

‘We are sure that there will be no change in buying costs for those looking to buy property in France, and there are no planned changes in taxations for the income made from property rentals, as well as no difference in capital gain tax as since January 2015 a single rate was applied for EU and Non-EU members,’ said director Francois Marchand.

‘In time, UK residents might be limited regarding the amount of GBP investments and the amount of wealth that can be sent abroad when a new government is in. A safe investment risk strategy has always been to diversify your portfolio. It will make no difference for our clients investing in a French property whether they have bought, are planning to buy, or are currently in the process of buying a property in France. The mountains were there before EU existed, and will be there tomorrow to welcome any international property investors, part of the EU or not,’ he added.

However, Alejandra Vanoli, managing director of Mallorca Sotheby's International Realty, believes that the real impact Brexit will have on European property markets will be hard to determine until the negotiations between the UK and the EU are finalised.

‘This of course will be most prevalent in the Spanish market due to the high concentration of British expats. However, these changes will undoubtedly need some time to take effect. Despite this, the Balearics are still a very attractive second home destination to British buyers due to our short flight time from the UK, secure lifestyle, warm climate and favourable legal framework for expats looking to invest in the property market,’ he said.

One possible effect is that prices could rise in popular locations if real estate investors move away from the UK to other EU countries to buy property. Camille Letuve Partner of Athena Advisers said that some foreign investors might turn away from London in favour of other capital cities such as Paris, Lisbon or Madrid.

‘In Paris, higher international demand will increase real estate prices in the years to come, providing good prospects for capital gains. This will be fuelled by low interest rates for non-resident investors,’ she explained.
‘In Lisbon, flexible real estate led residency programmes like the Golden Visa scheme will continue to attract non-EU investors. And for investors from inside the EU, they will continue to utilise Portugal’s tax efficient non-habitual residence scheme with no wealth tax and low income tax,’ she added.

John May, director of Sell4LessSpain, believes home owners in the country from the UK should not be too worried. ‘We expect prices to fall across the board, but there will probably be a slight correction with the expected increase in the strength of the euro against a decrease in the value of the pound,’ he said.

According to Branson Atterbury, marketing director at Kristall Spaces which specialises in developing and selling ski apartments in Austria, pointed out that buyers looking for a property in the EU have two years to complete their purchases while an exit strategy is planned.

‘If Article 50 is triggered, we predict no change for the following two years as we negotiate our exit and trading relationship with the EU. Purchases before conclusion of the exit will not be affected retrospectively,’ he explained.

He said that British buyers should always consider the sterling/euro exchange rate to ensure they negotiate a good deal when converting their currency, but there are many outside factors which affect the exchange rate and the firm predicts that sterling will strengthen once the uncertainty has been removed.

‘Non-EU citizens are already buying properties in Austria. Should a UK buyer’s status in Austria change once we have left the EU, non-EU citizens may buy Austrian properties through limited companies with a registered office inside the EU and there is no requirement for the shareholder to be a European citizen,’ he added.