There is still a lot of uncertainty over Brexit, and what the UK’s leaving the European Union will involve. In this article we take a look at how Brexit may influence the Spanish real estate sector regarding UK investment.
On June 23rd, 2016, the citizens of the UK voted to leave the EU. While the Brexiters won with the referendum with only a small margin of 1.9%, this was enough to end the nation’s EU membership.
As a result, and because the UK was one of the more robust EU member states, there will be substantial changes over the next few years within the European economy. So how will it affect the housing market in Spain?
The anticipated drop in the value of the pound, which will harm the UK economy, will also affect Spain. Spain for decades has been one of the most sought-after countries for British citizens looking for holiday home purchases or as a first home retirement location.
This, and the end of free movement for British citizens in the EU will possibly lessen the demand for real estate by British buyers in Spain.
However, after the 2016 referendum, there was an increase in British tourism, and the investment of second homes in Spain also went up.
Probably, Brexit will mostly hit coastal towns where British investment is highest. The most requested places are typically the Costa Blanca, The Balearic Islands, The Canary Islands, and the Costa del Sol.
The British buy more housing in Spain than any other EU country, with 21% of last year’s purchases, significantly more than other countries including Germany with 7%, and France with 8%, according to figures from the land registry.
After the UK has left the EU, the citizens will find it harder to settle in other EU member states as they will need a residency permit, a permit to work, and private health insurance.
But it is questionable if this will put all buyers off, as Europe offers outstanding opportunities for investment.
There are various reasons why Spain is so attractive to the British, which includes the relatively low cost of housing in Spain, the lifestyle, and the wonderful climate.
In the last five years, the property sector in Spain has bounced back from the global economic crash of 2008, when Spain was hit extremely hard. UK investors took advantage of the circumstances, and many were able to get a bargain Spanish property. British investors still see the market growth as a fair opportunity, and the most popular cities for real estate purchases are Madrid and Barcelona.
It is not only investors who are interested in Spain, other British individuals and families apply for a mortgage to buy to a home. When Brexit is completed, it is good to know the requirements to attain a mortgage in Spain will remain unchanged.
Although there are still many aspects of Brexit to be decided on, the points discussed above will likely most affect the Spanish property sector.
With potentially less UK residents buying homes in Spain, those in the tourism and property sectors are speculating if other nationalities may take their place. In this does come to pass, Brexit will possibly play a role in helping to diversify tourism in Spain. However, it remains to be seen if other nationalities will spend as much when holidaying in Spain as the party-loving Brits.