Will it be cheaper to buy in Spain post-Brexit?

House prices in Spain have been stead­ily re­cov­er­ing since the prop­erty mar­ket crashed between 2008 and 2014. This slow growth suffered in March 2020 when the pan­demic took a firm hold of Europe, with house sales in Spain dropping 37% and mortgages by another 28%, ac­cord­ing to Span­ish real es­tate web­site Idealista.

COVID-19 makes it hard to get a good read on the dir­ect im­pact of Brexit as strict travel re­stric­tions came at the same time as the end of the trans­ition period.

Brits have his­tor­ic­ally made up the largest per­cent­age of for­eign prop­erty in­vest­ment in Spain, but data from Spain’s not­ar­ies says the number of Brits buying in Spain was already falling in 2019, with a drop of 12.7% com­pared to 2018. 

However, in­terest in Span­ish prop­erty from UK buy­ers surged by 39% in Janu­ary 2021 com­pared to the same month in 2020, ac­cord­ing to real es­tate com­pany Taylor Wimpey Es­pana, sug­gest­ing Brexit is­n’t really slow­ing down Brit­ish sun-seekers.

How far will the pound stretch in Spain now Brexit is official?

The bot­tom line is that Span­ish prop­erty is still very af­ford­able com­pared to the UK, so Brexit is­n’t likely to slow de­mand too much. But could cur­rency be an is­sue?

The spend­ing power of Brits look­ing to in­vest in Spain has de­creased slightly with the fluc­tu­at­ing value of the pound after Brexit and COVID-19.

“There al­ways have been, and will con­tinue to be, ad­just­ments in the re­l­at­ive value of cur­ren­cies,” says Wolfend­ale. “It may af­fect your de­cision at the mar­gin, but it wont stop the mar­ket bey­ond the short term.

“New rates be­come the norm and people get on with it. If you are mak­ing plans to re­tire or en­joy your life, you can’t wait for the cur­rency mar­ket to be just right.”

Ac­cord­ing to Wolfend­ale, wealthy prop­erty in­vestors with their sights set on buying land in Spain or a nice sea-view apart­ment need­n’t lose much sleep over it.

He ad­ded, “UK cit­izens rep­res­ent a sig­ni­fic­ant part of the for­eign­ers buy­ing in Spain. And the more up mar­ket you go the less ef­fect it has.”

Will property taxes be more expensive post-Brexit?

The amount it will cost in taxes and fees for a Brit­ish per­son to buy or build a house in Spain would be the same as for any­one else, be they Span­ish, EU or non-EU: pur­chase tax, not­ary fees, re­gistry fee, etc.  

However, if you’re plan­ning to rent out your home, Brexit has a tax bump in store for you.

Rental in­come is taxed at 19% for EU res­id­ents, but non-EU cit­izens, as the Brit­ish now are, can ex­pect to pay 24%.

So it’s reas­on­able to think that Brit­ish in­vestors would at least take this into con­sid­er­a­tion, but whether or not it’s a deal breaker re­mains to be seen.

So does Brexit really impact the Spanish property market?

It’s still too early to tell for sure, but con­sid­er­ing that Brexit presents very little in the way of red tape to stop Spain’s top for­eign in­vestor, there’s not much reason to think it’ll have an ef­fect.

Cur­rency, taxes, per­mits, and prices are al­ways go­ing to change for one reason or an­other, so the per­fect time to buy or build, if such a thing ex­ists, is al­ways go­ing to be a mov­ing tar­get.

“The simple fact is that Spain is such a won­der­ful place to have a hol­i­day home in and re­tire to that people will just put up with al­most any­thing to be here,” adds Wolfend­ale.
If you’re considering building in Spain, reach out to Eco Vida Homes today to discover how your villa can be expertly designed around your lifestyle and be great for the environment at the same time!

Source: Spanish Solutions

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