Will Brexit affect UK Residents Buying Property Abroad?
15 August 2019

As the UK attempts to untangle itself from membership of the EU, there are only a few weeks left to hammer out the future relationship. However, with Boris Johnson committed to leaving the EU on 31 October, and the EU seemingly unwilling to compromise, there remains a huge amount of uncertainty about whether a deal can be thrashed out.

For UK residents considering purchasing property in the EU, this creates a dilemma. Should the property sale be rushed through to beat the deadline or would it be more prudent to wait?

While no-one has any concrete answers yet, here’s a run-through of the issues Brexit raises for buying property abroad.

The Current Rules

While the UK is part of the EU, it’s possible to buy property in any of the other EU countries without any restrictions. Membership of the EU means that residents of Britain are able to freely own property without having to wait for special permission.

As well as owning property in other EU countries, Brits are able to visit when they so choose, without restrictions. This means there’s no limit to the number of holidays individuals can take to a second home, or the length of time they’re permitted to stay. It’s also possible to retire to another EU country without having to request permission.

For this reason, owning property in the EU has been a very attractive option for UK residents, allowing them to enjoy a different climate without any complicated visa requirements.

No-Deal Brexit

The likelihood of a no-deal Brexit is looking increasingly possible, but at present, there are too many variables to be absolutely certain about what this could mean.

A No-Deal Contingency Action Plan has been published by the European Commission (EC) which urges individual EU member countries to adopt a generous approach to Brits who are already resident when Brexit takes place. Similarly, the UK has committed to protecting the rights of EU nationals who currently live and work in the UK.

However, this publication from the EC is only a guideline, and individual countries are free to adopt whichever approach they choose once a no-deal Brexit takes place. With no formal agreement, countries can adopt their own criteria for both Brits who are already there and new arrivals.

The UK being willing to offer the same relaxed approach will help significantly as many EU countries have already indicated they are only prepared to be generous if there is reciprocity.

It’s worth emphasising that these principles of reciprocity are not legally binding and may be reneged. In the event of a no-deal there will be no formal agreement in place and until there is, UK citizens purchasing property overseas are in a vulnerable position.

Movement of Citizens

The signs are that even if the UK leaves without a deal, the EU will not insist on visas for travel. While this is good news, it’s not the same as freedom of movement and raises many potential hurdles.

Just like other visitors arriving from outside the EU, UK citizens will be subject to limits on the duration of their stay. Individuals who were planning on purchasing a second property could find they’re not able to visit as freely as before. This could present restrictions on the number of holidays which can be taken, and also cause difficulties for individuals who rent out their properties and regularly visit to carry out checks.

Working in other EU countries has become an intrinsic part of many jobs, and businesses can choose to acquire property in any of the other nations. This is one area which is likely to face much heavier restrictions, as membership of the EU is integral to the ability to freely work in all member countries.

For retirees, there may be much tougher rules about qualifying for residency, with some countries insisting on minimum levels of income. Following Brexit, the same criteria for non-EU citizens will apply and there may be complications over payment of pensions, too.

Taxation

Britain presently has a double-tax treaty with EU countries to prevent UK citizens having to pay tax both at home and overseas. Even if the government is able to agree with the EU to allow this to continue there are many other tax implications.

Non-resident income tax (such as received from rental property) and capital gains tax are both higher for non-EU nationals, making property ownership more expensive.

The UK currently applies a 25% levy to pensions paid to non-EU countries. At present, it’s unclear whether this would apply to pensions being paid to individuals who are resident in properties within EU countries.

Brexit Following a Withdrawal Agreement

Although there are no signs of a compromise being struck at the moment, the possibility of a withdrawal agreement shouldn’t be completely ignored. Many of the above issues will still be an issue even with a withdrawal agreement but some may not be as challenging as with a no-deal scenario.

For example, the Government has been clear about the fact they aren’t willing to accept free movement of EU nationals. Without this reciprocity in place, the remaining EU nations are highly unlikely to consider allowing Brits to do the same. This means similar restrictions on travel, long-term residence and working will still apply, with visa requirements and limitations in place.

For those who want to purchase a property overseas, these restrictions could dent their plans. Even if the country allows the purchase of a property – as many are currently indicating – the difficulties over free movement could be prohibitive.

Finally – a Word on Currency

Bearing all of the above in mind, purchasing a property abroad will be infinitely more challenging post-Brexit, regardless of whether a deal is agreed. However, many expect a no-deal to have a more detrimental effect on the value of sterling.

The pound has plunged on the currency exchange since the referendum, dropping from approximately €1.32 to around €1.10. This means that while £100,000 would have given you €132,000 before, you’ll now only have €110,000 to spend. Sterling dropped to a new 10-year low in August and there are signs that it could tumble further once Brexit takes place.

This volatility in sterling on the currency exchange makes it more important than ever to guard against fluctuations. If you’re considering purchasing a property overseas, and want advice about how to protect your investment, talk to a representative from Privalgo today.

Will Brexit affect UK Residents Buying Property Abroad?
15 August 2019

As the UK attempts to untangle itself from membership of the EU, there are only a few weeks left to hammer out the future relationship. However, with Boris Johnson committed to leaving the EU on 31 October, and the EU seemingly unwilling to compromise, there remains a huge amount of uncertainty about whether a deal can be thrashed out.

For UK residents considering purchasing property in the EU, this creates a dilemma. Should the property sale be rushed through to beat the deadline or would it be more prudent to wait?

While no-one has any concrete answers yet, here’s a run-through of the issues Brexit raises for buying property abroad.

The Current Rules

While the UK is part of the EU, it’s possible to buy property in any of the other EU countries without any restrictions. Membership of the EU means that residents of Britain are able to freely own property without having to wait for special permission.

As well as owning property in other EU countries, Brits are able to visit when they so choose, without restrictions. This means there’s no limit to the number of holidays individuals can take to a second home, or the length of time they’re permitted to stay. It’s also possible to retire to another EU country without having to request permission.

For this reason, owning property in the EU has been a very attractive option for UK residents, allowing them to enjoy a different climate without any complicated visa requirements.

No-Deal Brexit

The likelihood of a no-deal Brexit is looking increasingly possible, but at present, there are too many variables to be absolutely certain about what this could mean.

A No-Deal Contingency Action Plan has been published by the European Commission (EC) which urges individual EU member countries to adopt a generous approach to Brits who are already resident when Brexit takes place. Similarly, the UK has committed to protecting the rights of EU nationals who currently live and work in the UK.

However, this publication from the EC is only a guideline, and individual countries are free to adopt whichever approach they choose once a no-deal Brexit takes place. With no formal agreement, countries can adopt their own criteria for both Brits who are already there and new arrivals.

The UK being willing to offer the same relaxed approach will help significantly as many EU countries have already indicated they are only prepared to be generous if there is reciprocity.

It’s worth emphasising that these principles of reciprocity are not legally binding and may be reneged. In the event of a no-deal there will be no formal agreement in place and until there is, UK citizens purchasing property overseas are in a vulnerable position.

Movement of Citizens

The signs are that even if the UK leaves without a deal, the EU will not insist on visas for travel. While this is good news, it’s not the same as freedom of movement and raises many potential hurdles.

Just like other visitors arriving from outside the EU, UK citizens will be subject to limits on the duration of their stay. Individuals who were planning on purchasing a second property could find they’re not able to visit as freely as before. This could present restrictions on the number of holidays which can be taken, and also cause difficulties for individuals who rent out their properties and regularly visit to carry out checks.

Working in other EU countries has become an intrinsic part of many jobs, and businesses can choose to acquire property in any of the other nations. This is one area which is likely to face much heavier restrictions, as membership of the EU is integral to the ability to freely work in all member countries.

For retirees, there may be much tougher rules about qualifying for residency, with some countries insisting on minimum levels of income. Following Brexit, the same criteria for non-EU citizens will apply and there may be complications over payment of pensions, too.

Taxation

Britain presently has a double-tax treaty with EU countries to prevent UK citizens having to pay tax both at home and overseas. Even if the government is able to agree with the EU to allow this to continue there are many other tax implications.

Non-resident income tax (such as received from rental property) and capital gains tax are both higher for non-EU nationals, making property ownership more expensive.

The UK currently applies a 25% levy to pensions paid to non-EU countries. At present, it’s unclear whether this would apply to pensions being paid to individuals who are resident in properties within EU countries.

Brexit Following a Withdrawal Agreement

Although there are no signs of a compromise being struck at the moment, the possibility of a withdrawal agreement shouldn’t be completely ignored. Many of the above issues will still be an issue even with a withdrawal agreement but some may not be as challenging as with a no-deal scenario.

For example, the Government has been clear about the fact they aren’t willing to accept free movement of EU nationals. Without this reciprocity in place, the remaining EU nations are highly unlikely to consider allowing Brits to do the same. This means similar restrictions on travel, long-term residence and working will still apply, with visa requirements and limitations in place.

For those who want to purchase a property overseas, these restrictions could dent their plans. Even if the country allows the purchase of a property – as many are currently indicating – the difficulties over free movement could be prohibitive.

Finally – a Word on Currency

Bearing all of the above in mind, purchasing a property abroad will be infinitely more challenging post-Brexit, regardless of whether a deal is agreed. However, many expect a no-deal to have a more detrimental effect on the value of sterling.

The pound has plunged on the currency exchange since the referendum, dropping from approximately €1.32 to around €1.10. This means that while £100,000 would have given you €132,000 before, you’ll now only have €110,000 to spend. Sterling dropped to a new 10-year low in August and there are signs that it could tumble further once Brexit takes place.

This volatility in sterling on the currency exchange makes it more important than ever to guard against fluctuations. If you’re considering purchasing a property overseas, and want advice about how to protect your investment, talk to a representative from Privalgo today.

Get a Personalised Quote

Thanks! We'll be in touch
Ready to open an account, start here

For immediate assistance please call

+44 (0)20 3880 0575

First Name
Last Name
Email Address
Phone
Your transfer, our expertise