The foreign buyer is one of the most important profiles of the Spanish residential real estate sector. His predilection for our country translates into a level of transactions that contributes to the dynamism of the housing market. The nationality that always leads to foreign operations is British. According to the College of Registrars, the British were behind 13.31% of total real estate purchases from foreigners in the second quarter of 2019. This percentage is the lowest in the historical series. In this post, we detail some of the consequences that could occur from producing a hard Brexit.
The United Kingdom's departure from the European Union without a firm agreement with the member states would impose heavy punishment on the Spanish real estate market. Our country has traditionally been a recipient of British buyers attracted by good weather and health as factors they value when thinking about their retirement.
A hard Brexit would end their status as European citizens and cause the demand for houses to decrease and also increase the stock, with the entry into the market of British properties that would find it difficult to travel between the two countries.
A departure from the UK without an agreement would cause a devaluation of the pound against the euro, which would make housing more expensive for these buyers. As the Registrars data already anticipates, the transmissions would be pushed down. The British demand for properties in Spain is formed, above all, by people over 40 who decide to retire and live in a place with good weather and a wide range of gastronomic and leisure activities.
Since the referendum was held, British public visits to real estate fairs looking for a home in Spain have been reduced. That the main foreign buyer of housing located on the coast paralyzes his purchase decision, directly influences the price of these properties. The Costa del Sol, Valencia, Azahar and Blanca, in addition to the two archipelagos would accuse adjustments.
Another of the possible consequences of a "no-deal" would be for the British who are already owners in Spain to sell their homes. The reason for this reaction is based on the loss of European status and, therefore, of certain advantages related to the free movement of persons or, even, of a sanitary nature. In addition, it would be difficult for the market to absorb a peak in the inventory.
The future of financing is also at stake. At the time when the British banks left the European Union, problems would arise regarding the granting of mortgages, given that the English entities would not be authorized to work in European territory. What would not change would be taxation: the taxes applied to the purchase of a house would be the same.
Although the level of uncertainty is really high, most experts agree that after a few months of some market tension, stability would finally be achieved thanks to the signing of agreements. The commercial links between Spain and Great Britain are very strong, and they would try to minimize the consequences of a hard Brexit through dialogue.