In June 2016, the British Public went to polls to vote in a referendum on membership of the EU. 17.4 million people voted to leave the European Union and as a result, the national government has now started work on an exit strategy.
The United Kingdom leaving the EU is certain to have a significant impact on many sectors of the European economy, including the real estate industry.
The pound is expected to fall, which will negatively affect the UK economy. The drop will also have ramifications for Spain, as the country is one of the leading destinations for UK citizens looking to buy holiday homes or permanent retirement accommodation.
Furthermore, the end of free movement across Europe for British Citizens is likely to deter many people from investing in Spanish real estate.
However, following the 2016 vote, the number of British tourists in Spain has increased and more people are buying second homes in the country.
Brexit will likely have the biggest impact on coastal regions where UK investment is the largest. Some of the most popular places for investment include the Balearic Islands, Costa Blanca, Costa del Sol, and the Canary Islands.
Last year, land registry data showed that over 21% of property sales in Spain went to British buyers. Meanwhile, just 7% of real estate acquisitions went to buyers from France and 8% to German investors.
After the UK has left the European Union, it will be more difficult for British citizens to relocate to EU countries, including Spain. They will be required to buy private health insurance, apply for residency permits and potentially obtain work permits.
Fortunately, despite the extra hoops, many buyers are still unlikely to be deterred from the EU property market, as many locations offer excellent investment opportunities.
Some of the factors that attract UK property buyers to Spain include lower house prices, the warmer climate and Spanish cuisine. Those factors are not going to change after the UK stops being a member of the EU.
What’s more, the mortgage application process for British people wanting to borrow money to buy real estate in Spain is not set to change after Brexit.
The 2008 global economic crash had a big effect on the real estate market in Spain. However, in recent years, the market has more than recovered and thousands of British citizens have seized at the opportunity to invest in regions across the country. Some of the most popular locations in Spain for overseas real estate investment include Barcelona and Madrid.
While many of the details surrounding the UK’s exit from the EU are still to be decided, the issues highlighted in this post are the ones set to have the biggest impact on the property market in Spain. In general, it’s believed that the effects of the exit in Spain will be minimal.
It’s highly possible that property investors and tourists from other countries will make up for any loss from a decline in British investment into Spain. As a result, Brexit might actually be beneficial to tourism diversity in Spain and foreign real estate investment. That said, many wonder whether other nationalities will be prepared to spend as much when on holiday as the booze-loving Brits.