buying property

British expats moving home due to Brexit face much higher property costs

by Ray Clancy on July 20, 2017

With British expats still unsure what their rights and status will be in European Union countries when Brexit takes place in two years’ time many may be planning to move home.

But they could find that selling their home in countries like Spain and France may not bring them enough money to buy in the UK where property prices are continuing to rise despite political and economic uncertainty.

(Victor Huang/Bigstock.com)

Property experts and economists had predicted that prices in the UK would fall after the EU referendum vote, but the market has continued to rise and even the snap general election in which produced a hung Parliament has failed to have a major impact.

The latest official figures published by the Office of National Statistics (ONS) show that prices increased by 4.7% in the 12 months to the end of May 2017. Although this annual figure has dropped, prices have continued to move upwards rather than downward.

Predictions in the run up to the EU vote in June last year, including one from then Chancellor George Osborne that they could fall by 10%, have never materialised. And the growth varies enormously according to location with some regions seeing even higher prices.

On top of higher prices, British expats moving home may find they cannot find a property to buy as there is a severe shortage of supply. The latest report from the Royal Institution of Chartered Surveyors (RICS) published in June said that stock levels of homes for sale has hit a new low.

Expats also face a double whammy as they may find that the property they own will not sell for as much as they would like, or need to buy another in the UK. Although prices are recovering in Spain, for example, they are still well below the peaks of 2007, so expats who bought at the peak of the market may be out of pocket. There is a similar picture in France where the market recovery is even slower than in neighbouring Spain.

According to foreign property debt experts EU Property Solutions, spiralling negative equity and increased mortgage repayments have left many Britons unable to sell up and come back to the UK.

‘It can be a difficult step to move away, but an even harder step to return home to the UK,’ said James Bell, managing director of EU Property Solutions. He added that the cost of living in the UK can also come as a shock for those who have lived abroad for many years.

However, there is some good news for expats as the weaker pound means that currency exchanges will work in their favour if they are moving money back to the UK to buy a home. Since the EU referendum last June the pound has fallen by around 12%.

‘We have seen sterling range against the euro from a high of €1.76 to a low of €1.02 at the peak of the credit crisis,’ said Mark Bodega, of foreign exchange firm HiFX. He pointed out that although it is expected that sterling will tread water at its current level in the near future the currency might climb as Brexit talks proceed.

James Stewart, who sells villas and apartments in Sotogrande in Spain in association with the estate agent Savills, agreed that when a property owner was considering selling, a favourable exchange rate could help.

‘We had an owner who rejected an offer when the euro was at a particular level but accepted it when the pound fell further. The property price didn’t change, but the fact that they would now get more pounds for their property meant they felt comfortable,’ he said.

{ 1 comment }

Thumbnail image for Golden visas schemes in Europe proving popular with international investors

Golden visas schemes in Europe proving popular with international investors

May 1, 2017 Spain

The golden visa scheme in Spain, which allows foreigners from outside of the European Union to be granted residency for investing in property and other assets, has attracted thousands of investors. The law offering residency permits to investors was introduced in Spain in 2013 and similar programmes are offered in other EU countries including Portugal, […]

Read the full article →
Thumbnail image for Hong Kong remains the world’s most expensive place to buy property

Hong Kong remains the world’s most expensive place to buy property

September 28, 2016 Hong Kong

Hong Kong is the most expensive city in the world to buy a home, followed by Singapore, New York, London and Paris, according to new research. These are cities where career expats often aspire towards working, but if they want to buy an apartment then they will pay more than anywhere else in the world, […]

Read the full article →